terms and conditions - noor bank...anas bin mohammed al sheikh general legal counsel and head of...

Terms and Conditions

A Saudi Closed Joint Stock Company, licensed by the Capital Market Authority, with a Capital of

SAR 852,735,000.

Head Office: Phone +966 11 279 1111 Fax +966 11 279 1571 P.O. Box 60677, Riyadh 11555,

Kingdom of Saudi Arabia.

Jadwa Saudi Equity Fund

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All praise is due to Allah, the Cherisher of world, and peace and blessing be upon the prophet of

Allah, on his family and all his companions.



Fund Manager

Jadwa Investment Company

Date of Amendment

February 22, 2018 G/ Jumada al-Thani 6, 1439 H

Jadwa Saudi Equity Fund is approved as a Shariah a-compliant investment fund in accordance with

Shariah principles approved by the Fund’s Shariah Committee.

These Terms and Conditions, Information Memorandum Information Memorandum, Fact Sheet and

all other documents are subject to the Investment Funds Regulations and include complete, clear,

correct, non-misleading and updated information about the Fund.

All Investors are advised to read these Terms and Conditions, Information Memorandum, Fact Sheet

and all documents related to the Fund.

The CMA approved establishment of the Fund and issuance of units on March 11, 2007 G/ Safar 21,

1428 H

This is a translated version of the Terms and Conditions. In the event of discrepancy between the

English version and the Arabic version of these Terms and Conditions, the Arabic version shall

prevail.

Anas Bin Mohammed Al Sheikh

General Legal Counsel and Head of Compliance

Tariq Bin Ziad Al Sudairy

Managing Director and Chief Executive Officer


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Table of contents

Executive Summary ...................................................................................................................................... 7

Terms And Conditions .................................................................................................................................. 9

1. General Information ...................................................................................................................... 9

2. Governing Law ............................................................................................................................ 10

3. Objectives of The Investment Fund ............................................................................................ 10

4. Fund Term ................................................................................................................................... 16

5. Investments Restrictions and Limitations.................................................................................... 16

6. Currency ...................................................................................................................................... 17

7. Fees, Charges and Expenses ........................................................................................................ 17

8. Valuation and Pricing .................................................................................................................. 20

9. Dealings ....................................................................................................................................... 21

10. Distribution Policy ...................................................................................................................... 26

11. Reporting to Unitholders ............................................................................................................. 26

12. Unitholders Register .................................................................................................................... 27

13. Meeting Of Unitholders ............................................................................................................... 27

14. Unitholders’ Rights ..................................................................................................................... 29

15. Unitholders’ Liability .................................................................................................................. 29

16. Unit Characteristics ..................................................................... Error! Bookmark not defined.

17. Changes to the Fund's Terms and Conditions ............................................................................. 30

18. Termination of the Fund .............................................................................................................. 32

19. Fund Manager .............................................................................................................................. 32

20. Custodian ..................................................................................................................................... 34

21. Auditor......................................................................................................................................... 35

22. Fund's Assets ............................................................................................................................... 36

23. Unitholder’s Acknowledgment ................................................................................................... 37

Annex 1 - Shariah a Investment Guidelines................................................................................................ 38

Annex 2 – Subscription Form ..................................................................................................................... 41

Annex 3 – Redemption Form ...................................................................................................................... 42

Annex 4 – Investor Confirmation ............................................................................................................... 43

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Definitions

The following terms shall have the meanings given to them below when used herein:

“Administrator” means HSBC Saudi Arabia Ltd acting as Administrator of the Fund;

“Auditor” means the auditor of the Fund as appointed by the Fund Manager;

“Authorized Persons Regulations” means the Authorized Persons issued by CMA under resolution number 1-83-

2005 on 21/05/1426 H (corresponding to 28/06/2005 G) as amended from time to time;

“Business Day” means any working day of Saudi Stock Exchange “Tadawul”;

“Capital Market Law” means the Capital Market Law issued pursuant to Royal Decree No. m/30 dated 2/6/1424

H (as amended from time to time);

“Class A Units” means a class of Units which grants Unitholders certain rights and entails certain obligations as

set forth in this Information Memorandum and Terms and Conditions;

“Class B Units” means a class of Units which grants Unitholders certain rights and entails certain obligations as


“Class C Units” means a class of Units which grants Unitholders certain rights and entails certain obligations as


“Account Opening Agreement” means the agreement concluded between Unitholder and the Fund Manager, and

includes the Terms and Conditions, regulates the relationship between Unitholder and the Fund Manager and

illustrates obligations and liabilities thereof;

“Client Agreement” means the agreement concluded between Unitholder and the Fund Manager, and includes the

Terms and Conditions, regulates the relationship between Unitholder and the Fund Manager and illustrates

obligations and liabilities thereof;

“CMA” means the Capital Market Authority including, wherever the context so permits, any committee or

subcommittee, employee or agent authorized by CMA;

“Custodian” means HSBC Saudi Arabia Ltd acting as Custodian of the Fund and it is a person licensed under the

Authorized Persons Regulations to carry out securities custody activities;

“Fund” means Jadwa Saudi Equity Fund;

“Fund Board” means the board of directors of the Fund;

“Fund Manager” means Jadwa Investment Company acting as Fund Manager;

“Implementing Regulations” means the Implementing Regulations issued pursuant to the Capital Market Law;

“Index” means the Index based upon which the performance of the Fund is measured;

“Information Memorandum” means the Information Memorandum issued in connection with the offering of

Units in the Fund, in compliance with the Investment Funds Regulations;

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“Initial Public Offering” means initial public offering of securities, offered publicly for subscription for the first

time in the primary market;

“Initial Offering Date” means the date on which Units in the Fund shall be offered for subscription;

“Investment”, “Investments”, “Assets” are synonymous terms used interchangeably, each of which is used to

refer to targeted securities in which the Fund invests;

“Investment Funds Regulations” means the regulations issued by CMA board pursuant to Capital Market

Regulation issued pursuant to resolution number 1-219-2006 on 3/12/1427 H as amended by Resolution No.

1/61/2016 dated 16/8/1437 H corresponding to 23/5/2016 G (as amended from time to time);

“Investment Grade Credit Rating” means certified rating from a local/international credit rating agency proving

an issuer’s credit worthiness and ability to meet its obligations towards security holders, such as S&P, Moody’s

and Fitch. Minimum rating is –BBB or its equivalent;

“Investor”, “Investors” and “Unitholder” are all synonymous terms used interchangeably, each of which is

used to refer to the client who invests and holds Units in the Fund;

“Kingdom” and “Saudi Arabia” means the Kingdom of Saudi Arabia;

“Related Parties” means the Fund Manager’s directors, officials or employees;

“Minimum Subscription Amount” has the meaning given to it in Clause 9(j) of the Terms and Conditions;

“Murabaha” means a Shariah compliant deposit;

“Net Asset Value” means the value of the Fund’s total assets minus the value of the Fund’s total liabilities;

“Open-Ended Investment Fund” means an investment fund with changing capital, the units of which increase

with the issuance of new units, and decrease with redemption by unitholders of some or all of their units;

“Fund Ordinary Resolution” refers to the meaning set out in the glossary used in CMA regulations and rules;

“Rights Issuance” means rights issued for the purposes of increasing share capital;

“Redemption Date” means the date on which a Unitholder redeems its Units;

“Redemption Form” means the document submitted by the Fund Manager to every Unitholder, according to

which the latter requests Units to be redeemed according to the Terms and Conditions, the form of which is

attached as Annex 3 of the Terms and Conditions;

“Redemption Request” means a request submitted by a Unitholder to redeem its Units in the Fund;

“Shariah Board” means the Shariah Advisory Board of the Fund Manager;

“Shariah Investment Guidelines” means guidelines set out in Annex 1 of the Terms and Conditions;

“Subscription Amount” means the amount invested by a Unitholder in the Fund;

“Subscription Date” means the date on which a Unitholder subscribes to the Fund;

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“Subscription Form” means the document submitted by the Fund Manager to every Investor, according to which

the Investor requests to subscribe for Units according to the Terms and Conditions, the form of which is attached

as Annex 2 of the Terms and Conditions;

“Subscription Price” means the net asset value per Unit on the relevant Subscription Date;

“Tadawul” means the Saudi Arabian Stock Exchange;

“Target Securities” means the securities in which the Fund intends to invest as per Clause 3(b) herein;

“Terms and Conditions” mean the Terms and Conditions of Jadwa Saudi Equity Fund updated on 22/02/2018G

06/06/1439H unless otherwise mentioned;

“Transaction Fee” means costs and commissions resulting from the purchase or sale of securities, borne by the

Fund at the actual cost;

“Unit” means the proportional share of the Unitholders in the Fund. Each Unit (including fractions of a Unit) is

treated as representing one proportional share of the Net Assets of the Fund; and

“Unit Classes” means Class A, Class B, and Class C Units of the Fund collectively;

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Executive Summary

Fund Name Jadwa Saudi Equity Fund.

Fund Manager Jadwa Investment Company.

Custodian HSBC Saudi Arabia Ltd.

Administrator HSBC Saudi Arabia Ltd.

Fund Currency Saudi Arabian Riyal.

Investment Objectives Achieving long term capital increase for Unitholders through

investing in companies listed on Saudi Arabia Stock Exchange and

Saudi companies listed on other stock exchanges or any affiliates in

accordance with investment Shariah principles.

Fund Benchmark Index S&P Saudi Arabia Shariah compliant (Total Return).

Risk Level High. For more information, please refer to the risk factors set forth in

Clause 3 of the Information Memorandum.

Investment Suitability Due to the high level of risks related to investment in the Fund as

further explained in the Information Memorandum, investment in the

Fund may not be suitable for Investors who are risk averse.

Prospective Investors have to request advice from investment

consultants in connection with the risk factors set forth in Clause 3 of

the Information Memorandum.

Minimum Initial Subscription

Amount

Class (A) Units: SAR 25,000,000 per Investor.

Class (B) Units: SAR 1,000 per Investor.

Class (C) Units: SAR 1,000 per Investor. Such Units are allocated to

fund related parties.

Minimum Additional

Subscription Amount

SAR 100 per Investor.

Minimum Redemption

Amount


Application Submission

Deadline

Before 10 am (Riyadh local time) on the Valuation Day.

Valuation Day All Business Days in the Kingdom.

Subscription Day All Business Days in the Kingdom.

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Redemption Day All Business Days in the Kingdom.

Payment Day Within five Business Days following the Valuation Day.

Subscription Fee Not exceeding 3 % of the Subscription Amount.

Management Fee Class (A) Units: 1.25 % per year.

Class (B) Units: 1.95% per year.

Class (C) Units: 0.98% per year. Such Units are allocated to fund related

parties.

Redemption Fee 1% of the value of the redeemed units. An early Redemption Fee

shall be applicable only to Units redeemed within 30 days from the

date of purchase.

Transaction Fee The Fund shall bear all Transaction Fees, expenses and commissions

incurred upon the purchase or sale of securities at actual cost.

Other expenses The Fund shall be liable for its operational, professional and other

administrative expenses, including, but not limited to, legal and tax

consultancy expenses, other charges, taxes, zakat, profit purification,

litigation expenses, publication and index calculation.

Initial Offering Date May 16, 2007 G- 28/04/1428 H

Unit Price on the Date of

Issue of these Terms and

Conditions

Class (A) Units: SAR 100

Class (B) Units: SAR 100

Class (C) Units: SAR 100

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1. GENERAL INFORMATION

a. Name and License Number of Fund Manager

The Fund is managed by Jadwa Investment Company, a closed joint stock company registered under

commercial registration number 1010228782, licensed by the CMA under license number 06034-37

dated [August 21, 2006].

b. Address and Head Office of Fund Manager

The address of the Fund Manager is as follows:


P.O. Box 60677

Riyadh 11555

Kingdom of Saudi Arabia

c. Web Address of Fund Manager

The Fund Manager’s website is www.jadwa.com

d. Name of Custodian and License Number

The Fund has appointed HSBC Saudi Arabia Ltd as Custodian of the Fund. The Custodian is licensed

by CMA under license number 05008-37.

e. Web Address of Custodian

The Custodian’s web address is www.hsbcsaudi.com

f. Name of Investment Fund

http://www.jadwa.com/

http://www.hsbcsaudi.com/

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The name of the Fund is Jadwa Saudi Equity Fund.

g. Compliance with Laws

Fund’s Terms and Conditions and all other documentation comply with the Investment Funds

Regulations and contain complete, clear and accurate information in connection with the Fund.

h. Interpretation

These Terms and Conditions shall be read in conjunction with the Fund’s Information Memorandum,

Fact Sheet and any other documents prepared by the Fund Manager in connection with the Fund.

i. Approval of Terms and Conditions

Unitholders shall be deemed to have accepted and signed these Terms and Conditions upon

subscribing for Units.

j. Date of Issuance and Amendment

These Terms and Conditions have been issued on June 30, 2007 G (Jumada al-Thani 15, 1428 H) and

updated on February 22, 2018 G (Jumada al-Thani 6, 1439 H).

2. GOVERNING LAW

The Fund is subject to the Capital Market Regulation and its Implementing Regulations as well as other

relevant laws and regulations applicable in the Kingdom. The Fund and the Fund Manager are both

regulated by CMA.

3. OBJECTIVES OF THE INVESTMENT FUND

a. Investment Objectives

As an Open-Ended Investment Fund, the primary investment objective of the Fund is to provide long-

term capital increase for Unitholders by investing in companies listed on Saudi Stock Exchange and

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Saudi companies or any of their affiliates which are listed on any other stock exchange in accordance

with Shariah Investment Guidelines mentioned in Annex 1 of these Terms and Conditions. In addition,

the Fund may invest in short-term Murabaha transactions. The Fund’s objective is to outperform the

benchmark index. Unitholders shall not receive any dividends; as all net profits, as well as dividends

and revenues, shall be reinvested.

The Index: S&P Saudi Arabia Shariah Compliant Index (Total Return). Investors have access to the

Index information and the Fund Manger’s performance on the website of Jadwa Investment Company

(www.jadwa.com ).

b. Investment Policies and Practices

1. The Fund aims to invest in the following securities (“Target Securities”):

a. Companies shares listed on any Saudi Stock Exchange (including main markets, parallel

markets and any other market that may be introduced by competent authorities in future on

which public equity securities are listed/traded) or shares and/or depository receipts of

Saudi companies and/or their subsidiaries/affiliates listed on any other stock market in the

world;

b. Shares offered through initial public offering (IPOs) or secondary offering of Saudi

companies that are to be listed on Saudi Stock Exchange (including main markets, any

parallel markets and any other market that may be introduced by competent authorities in

future on which public equity securities are listed/traded) or offerings of shares and/or

depository receipts of Saudi companies and/or their subsidiaries/affiliates that are to be

listed on any other stock market in the world;

c. Rights issued to increase capital of Saudi companies that are listed or to be listed on Saudi

Stock Exchange (including main markets, any parallel markets and any other market that

may be introduced by competent authorities in future on which such securities are

listed/traded) or rights of Saudi companies and/or their subsidiaries that are listed or to be

listed on any other stock market in the world;

d. The Fund may invest in other Shariah compliant funds investing in listed companies on

any Saudi Stock Exchange (including main markets, any parallel markets and any other

market that may be introduced by competent authorities in the future on which public

equity securities are listed/traded), that are publicly offered and licensed by relevant


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competent authorities, all such investments together should not exceed 50% of the Fund’s

Net Asset Value at the time of investment. Moreover, at the time of investment, Fund’s

exposure to a single fund shall be no more than 25% and the Fund shall not own more than

20% of another fund for its own benefit.

e. Real Estate Investment Traded Funds (REITs) that are listed or to be listed on any Saudi

Stock Exchange (including main markets, any parallel markets and any other market that

may be introduced by competent authorities in the future on which such securities are

listed/traded);

f. Any other financial instrument(s) related to securities explained under (a), (b), (c), (d) and

(e) that are listed or to be listed on any Saudi Stock Exchange (including main markets,

any parallel markets and any other market that may be introduced by competent authorities

in the future on which such securities are listed/traded);

2. The Fund Manager may reduce minimum investment in securities explained under (a), (b), (c),

(d), (e) and (f) of clause 1 of this article, from 30% to 0% in the following cases:

a. In cases where the Fund Manager expects a sharp drop in stock markets due to

international or regional economic or political conditions;

b. In cases where investment opportunities that fit the Fund's objectives are not

available;

c. Any other reason deemed appropriate by the Fund Manager to protect Investors’

interests which may include, bankruptcy of any leading local company, or

bankruptcy of large local bank, or the Fund Manager expects a sharp

decline/deterioration in the state of local economy which in turn directly or

indirectly affects Fund’s Investments.

3. If the Fund Manager decides to reduce minimum investment in securities explained under (a),

(b), (c), (d), (e) and (f) under clause 2 of this article from 30% to 0%, the Fund Manager may

allocate all assets of the Fund in cash or to short-term Murabaha transactions

4. The Fund Manager may distribute all its assets in short-term Murabaha transactions in the

following cases, for example without limitation:

a. Decline in the performance of the Saudi Stock Exchange;

b. Diversification of the Fund's investments to benefit from the return of money markets.

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5. The following table sums up the Fund’s investment limits.

Type of Investment Description Minimum

of Fund

Assets

Maximum

of Fund

Assets

Securities Explained

under Sub-Clauses

(a), (b), (c), (d) and

(e) of Clause 1 of

this Article.

Shares or depository receipts of Saudi

companies (including IPOs, secondary

offerings, Rights Issue) and Saudi REITs listed

or to be listed on any Saudi stock exchange

(including main markets, any parallel markets

and any other market that may be introduced

by competent authorities in the future on

which such securities are listed/traded) or

Saudi companies and/or their

subsidiaries/affiliates and REITs that are listed

or to be listed on any other stock market in the

world. There shall be no limit in terms of

minimum or maximum exposures to main

markets, any parallel markets and any other

market that may be introduced by competent

authorities in the future on which such

securities are listed/traded

30 % 100 %

Short-Term

Murabaha

Transactions










0% 70%

14









Similar Saudi

Equity Funds.

Saudi equity funds licensed by competent

authorities. At the time of investment, no more

than 25% of Fund’s Net Assets Value will be

invested in a single Saudi equity fund and the

Fund shall not own more than 20% of any fund

for its own benefit.

0% 50%

Cash Liquidity

Funds.

Cash exposure will be maintained by the Fund

Manager as deemed appropriate. The exposure

limits mentioned are subject to exceptions

mentioned in clause 2 and 3 of this Article.

0% 70%

*Money market tools at banks licensed by SAMA are all rated (Investment Grade Credit Rating). Therefore, the

Fund shall not invest in unrated Murabaha.

*For the avoidance of doubt, subsidiaries/affiliates, used above, shall have the meaning given to them in the

Glossary of Defined Terms Used in the Regulations and Rules of CMA.

6. Subject to the limits mentioned above, the Fund Manager shall make investment decisions as it

deems appropriate at its sole discretion.

7. The Fund's assets vary in terms of the nature of investment into long-term and short-term

investments in the Stock Exchange. The Fund's assets will be divided into securities in which the

Fund makes long term investments, and which will be contained in portfolios and securities in

which the Fund invests for liquidity and trading purposes.

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8. The Fund Manager’s investment decision-making process combines top-down and bottom-up

approaches. Using top-down approach, portfolio management team analyses local fundamental

economic indicators, current and expected interest rates locally, dynamics of local

sectors/industries along with other geo-political factors. The team also analyses market related

factors like historical and expected liquidity, volatility, etc. Bottom-up approach involving

fundamental research (that includes constructing financial models and detailed financial

forecasts) is used to select investment opportunities and construct the Fund’s portfolio. Portfolio

management team of the Fund Manager performs a regular assessment of investment

opportunities to ensure portfolio allocations are in line with long term return objectives of the

Fund.

9. The Fund Manager’s team uses an Active Investment Strategy to identify Investments that

expected to achieve returns in the long term through various research studies of companies and

basic research studies of related parties, in order to regularly assess the conditions of the market

and relevant companies thus to manage the Fund with high effectiveness.

10. The Fund Manager shall not invest in any securities other than those mentioned above.

11. The Fund shall not invest in any securities which do not comply with the Shariah Investment

Guidelines stipulated in Annex 1 of these Terms and Conditions.

12. The Fund shall follow investment limitations stipulated in Clause 41 of Investment Funds

Regulations.

13. The Fund may obtain a Shariah compliant financing to invest in Target Securities, such loans

should not exceed 10% of the Fund’s Net Asset Value and for a maximum tenure of one year.

However, the Fund may borrow from the Fund Manager, any of its affiliates or other banking

entities (that are appropriately licensed by competent central banks in relevant jurisdictions) to

cover redemption requests and such borrowing shall be subject to 10% limit, as mentioned and

allowed under Article 64 of Investment Funds Regulations.

14. The Fund shall not invest in financial derivatives other than financial instruments related to

Rights Issuances that are in compliance with Shariah Investment Guidelines.

15. The Benchmark index mainly measures the Fund’s performance in Saudi Stock Exchange. If

Saudi companies issue their shares in non-Saudi stock markets, the Fund can also invest in them.

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16. Neither past performance of the Fund nor past performance of the Benchmark Index is an

indication of how the Fund or relevant market(s) will perform in the future.

17. There is no guarantee to Unitholders that the Fund’s absolute performance or its performance

relative to the Benchmark Index will repeat or match past performance.

4. FUND TERM

The term of the Fund is perpetual. However the fund manager shall seek the consent of unitholders by way

of a special fund resolution to terminate a the fund. The fund manager must give unitholders and the

Authority at least (21) days written notice of the intention to terminate the public fund,

without prejudicing the fund’s terms and conditions..

5. INVESTMENTS RESTRICTIONS AND LIMITATIONS

a. The Fund Manager shall comply with restrictions/limitations that apply on the Fund and are outlined in

Investment Funds Regulations, these Terms and Conditions, including Shariah Investment Guidelines

and Information Memorandum.

b. No more than 25% of the Fund’s Net Asset Value may be invested in Units of another Investment

Fund.

c. No more than 20% of the Net Asset Value of the units of another investment fund may be held for the

benefit of the Fund.

d. No more than 20% of the Fund’s Net Asset Value may be invested in all classes of securities issued by

any single issuer.

e. No more than 10% of the Net Asset Value of the Fund may be held in securities issued by any single

issuer for the benefit of the Fund.

f. Not more than 25% of the Fund’s Net Asset Value may be invested in different parties belonging to

the same group, including all Investments in securities issued by different parties belonging to the

same group and money market transactions, subject to a party regulated by SAMA or equivalent

regulator in a jurisdiction other than the Kingdom, concluded with different views belonging to the

same group and bank deposits with different views belonging to the same group.

g. No more than 10% of the Fund’s Net Asset Value may be invested in a class of securities issued by

any single issuer, with the exception of the following:

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i. Debt instruments issued by the Government of the Kingdom or by a sovereign issuer,

which may comprise not more than 35% of the Fund’s Net Asset Value; in

accordance with the Investment Funds Regulations;

ii. Debt instruments listed, which may comprise not more than 20% of the Fund’s Net

Asset Value;

iii. The Fund objective to invest in shares listed on Tadawul or any regulated exchange,

which may invest more than 10% of the Fund’s Net Asset Value in shares issued by

any single issuer listed on Tadawul or any regulated stock exchange provided that

such investment does not exceed the market capitalization of the issue expressed as a

percentage of the total market capitalization of all issuers listed on Tadawul or any

other regulated stock exchange;

iv. Investing more than 10% of the Fund’s Net Asset Value in shares of a single issuer of

a sector, listed on Tadawul or any other regulated stock exchange provided that such

investment does not exceed the market capitalization of the issue expressed as a

percentage of the investable universe.

h. No more than 10% of the Fund’s Net Asset Value may be invested in derivatives.

i. No more than 10% of the Fund’s Net Asset Value may be invested in illiquid Assets.

j. The portfolio of the Fund may not include any security where a call is to be made for any sum unpaid

on that security unless it is feasible to pay the entire amount of cash or securities that can be converted

into cash from the portfolio of the Fund within (5) business days.

6. CURRENCY

The currency of the Fund shall be Saudi Arabian Riyals (SAR). If payment for Units is made in a currency

other than the currency of the Fund, the Fund Manager shall convert the payment currency to the Fund

currency at the exchange rate. Investors shall pay for currency exchange charges, if any.

7. FEES, CHARGES AND EXPENSES

a. Payments Deducted from Fund’s Assets

i. Management Fee

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In consideration for managing the Assets of the Fund, the Fund pays to the Fund Manager an annual

Management Fee (“Management Fee”) equal to the following:

1.25 % of the Fund’s Net Asset Value for each Class (A) Unit;

1.95 % of the Fund’s Net Asset Value for each Class (B) Unit;

0.98 % of the Fund’s Net Asset Value for each Class (C) Unit.

Management Fees shall be calculated and accrued on each Valuation Day based on the latest valuation

of the Net Asset Value. The Fund Manager shall deduct the Management Fee on a monthly basis.

ii. Custody Fee

a. The Fund shall pay the Custodian an annual fee of 0.12% of the Fund’s Net Asset Value.

b. The Fund shall pay the Custodian a Transaction Fee of SAR 187.50 per Transaction

(“Transaction Fee”).

iii. Audit Fee

The Fund shall pay the Auditor an annual fee of no more than SAR 40,000 (“Audit Fee”).

iv. Administration Fee

The Fund shall pay the Administrator an annual fee of 0.08 % of the Fund’s Net Asset Value

(“Administration Fee”).

v. Regulatory Fee

The Fund shall pay the regulatory bodies an annual fee of no more than SAR 7,500.

vi. Fund Board Remuneration

The Fund shall remunerate members of the Fund Board of Directors for travel expenses and other

reasonable expenses incurred with regard to their obligations towards the Fund, provided that such

remuneration shall not exceed 0.10% of the Fund’s Assets annually.

Remuneration of Fund’s independent board members for the services they rendered to the Fund is

estimated at no more than SAR 30,000 per annum.

vii. Publication Fee

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In relation to the Fund’s annual report required for Unitholder reporting purposes, the Fund Manager

shall charge a publication fee of SAR 15,000 on each Valuation Day (“Publication Fee”). The

Publication Fee shall be deducted annually.

viii. Dealing Fee

The Fund shall bear all costs of transactions and brokerage commissions it incurs as a result of

investment purchase and sale. The total amount of such costs shall be disclosed in the audited annual

and semi-annual reports.

ix. Other Expenses

The Fund shall pay for all expenses and costs resulting from the Fund’s activities. The Fund shall pay

for any services related to any third party with regard to administration and operation services of the

Fund (such as but not limited to expenses of legal counsel) at the actual cost which is expected not to

exceed 0.3% of the Fund’s Net Asset Value each year. The above mentioned expenses are an estimate

only and only actual expenses shall be deducted. Actual expenses shall be mentioned in the Fund’s

annual report.

x. Taxes

VAT will be deducted by 5% for expenses and fees that subject to VAT.

The Fund shall indemnify and hold the Fund Manager harmless along with the Fund’s Board

members, managers, employees, agents, advisors, affiliate companies and workers, against all claims,

liabilities, costs, expenses, including judgments, legal fees, and amounts paid for defense and

settlement which they may incur as a result of the activities they exercise on the Fund’s behalf as long

as the Fund Manager undertakes its duty in good faith and works in a way believed to be in the Fund’s

best interest and as long as it is not accused of gross negligence or fraud.

b. Details of Charges Imposed in connection with Subscription and Redemption Requests

i. Subscription Fee

A Subscription Fee of no more than 3% of the Subscription Amount is charged on each initial or

subsequent subscription by the Investor in the Fund’s Units (“Subscription Fee”). Subscription

Fee is deducted at the time the subscription monies are received and shall be paid to the Fund

Manager. For the avoidance of doubt, the Fund Manager shall be entitled to waive any

20

subscription fee as it deems necessary.

ii. Early Redemption Fee

Early Redemption Fees of 1% of the redeemed amount shall be payable by Unitholder to the Fund

Manager (“Redemption Fee”). If a Unitholder redeems Units within thirty (30) days as of the date

of purchasing the same, Redemption Fees shall be imposed in order to indemnify the Fund against

the expenses it incurs as a result of early redemption. Such fee shall be calculated on redeemed

Units based on a ‘first in, first out” basis.

8. VALUATION AND PRICING

a. A Description of Valuation Method and Basis of Underlying Assets

For the purposes of determining the value of the Fund’s assets, Investments in Target Securities that

are listed/traded on an exchange shall be valued at the closing prices as of the valuation day on the

relevant exchange. Profits or dividends receivable shall be accrued up to the Valuation Day. Target

Securities purchased through a book building process shall be valued at cost starting from the date

Fund Manager subscribes to the securities till the date such securities commence trading on an

exchange. Target Securities allocated via a corporate action shall be valued at their intrinsic value as of

the ex-right date to the date the securities commence trading on an exchange. Specifically, where a

security is a unit of another fund, such securities shall be valued based on the last unit price declared

by such funds up to the effective valuation date. Direct investments in money market instruments that

do not trade on an exchange shall be valued based on cost plus profit accrued up to the Valuation Day.

Cash shall be added to the Fund's Assets to reach the total value of the Fund's Assets.

b. Frequency of Valuation and Number of Valuation Points

The Fund’s Unit price shall be calculated on each Business Day.

c. Actions to be Taken In case of Misevaluation or Mispricing

In case the Fund Manager becomes aware of any misevaluation or mispricing in relation to the Fund’s

Assets, the Fund Manager shall use good faith efforts to re-evaluate the Fund’s Assets and make

corrections as necessary to rectify the price per Unit .Valuation and pricing of investments in

currencies other than Saudi Arabian Riyals will be referenced to closing prices as published by

Thomson Reuters, Bloomberg or other similar data providers as deemed appropriate by the Fund

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Manager. For the avoidance of doubt, the Fund Manager shall immediately compensate all affected

Unitholders, including ex-Unitholders, for all misevaluations or mispricing.

d. A Description of Method for Calculating Unit Price

The price per Unit shall be calculated by deducting the Fund’s total liabilities from the value of total

Assets and dividing the value by the number of Units existing on Valuation Day.

9. DEALINGS

a. Responsibilities of Fund Manager in Relation to Subscription and Redemption Requests

i. The Fund Manager shall process all Subscription Forms and Redemption Requests

as soon as possible without any undue delay, in accordance with this Clause 9 of the

Terms and Conditions.

ii. The Fund Manager may, at its absolute discretion, defer any Redemption Request.

The Fund Manager may use this discretion in instances for example (but not limited

to) where dealing on the relevant exchange generally or in securities that constitute a

material and meaningful amount of the Fund is suspended on the relevant exchange

and the Fund Manager reasonably believes determination of Net Asset Value per

Unit is difficult due to such suspension.

iii. If any redemption would reduce an Investor’s investment in the Fund to lower than

the Minimum Subscription Amount, the Investor’s entire investment will be

redeemed. Proceeds of all redemptions will be paid in the Fund's currency by

depositing into a Unitholder’s account.

b. Period between Redemption Request and Payment of Proceeds

Redemption proceeds shall be available for Investors before close of business on the fourth business

day following the Valuation Day.

c. Deferring or Suspending Dealing in Units

The Fund Manager shall suspend subscription and redemption in Units if CMA orders such

suspension. The Fund Manager may not suspend the subscription and redemption of Units, unless any

of the following circumstances apply:

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i. If redemption would reduce an Investor’s investment in the Fund to lower than the Minimum

Subscription Amount, the Investor’s entire investment will be redeemed. Proceeds of all

redemptions will be paid in the Fund's currency by depositing into a Unitholder’s account.

ii. On any Valuation Day, if redemption requests exceed 10% of the Fund’s Assets on the previous

Valuation Day, the Fund Manager may, at its absolute discretion, defer any redemption /

transfer requests on a pro rata basis, where total value of requests do not exceed 10%.

Redemption and transfer requests, deferred from the previous day, shall be fulfilled on the

following day, subject to 10% limit. Valuation of assets may not be delayed for two business

days as of the deadline for submitting subscription forms and redemption requests.

d. Deferred Redemption Requests

The Fund Manager may, at its absolute discretion, defer any redemption and/or transfer request if there

has been a suspension of dealing on the primary market in which the securities or other Assets held by

the Fund are traded, either in general or in relation to Fund’s Assets that the Fund Manager reasonably

believes to be material to the Fund’s Net Asset Value.

If the value of redemption requests, including transfer, exceeds 10% of the Fund’s Net Asset Value on

the previous Valuation Day, the Fund Manager may, at its absolute discretion, defer any redemption

and/or transfer request on a pro rata basis in order for the total value of requests not to exceed 10%.

The deferred redemption and transfer requests shall be fulfilled on the following Valuation Day and

shall always be subject to 10% limit. The valuation of Assets shall not be later than two Business Days

as of the deadline for submitting Redemption Requests.

e. Transfer of Units

New Investors must comply with these Terms and Conditions, including ‘Know Your Customer’ and

Anti-Money Laundering requirements of the Fund Manager and all transfers of units shall become

effective only after registration within the Unitholders register.

The Fund Manager may, based on Anti-Money Laundering and ‘Know Your Customer’ reports or any

instructions from any governmental regulatory bodies, reject transfer applications. The Fund Manager

shall have the right to share information pertaining to investors with the Custodian for the purposes of

satisfying internal audit requirements and Anti-Money Laundering and Counter-Terrorism

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requirements. In addition, the Fund Manager may reject any transfer which, in its opinion, may result

in a violation of any CMA regulation.

f. Investment in the Fund by the Fund Manager

The Fund Manager shall be entitled to invest in Units of the Fund.

g. Date Set and Deadlines for Submission of Requests for Subscriptions and Redemptions on any

Dealing Day

The application submission deadline is before 10 am (Riyadh local time) on the Valuation Day. The

determination of the Subscription Date and Redemption Date depends on the date of submitting the

completed applications.

h. Procedures for Submitting Instructions to Subscribe in or Redeem Units

1. Subscription Process

In case any Investor wishes to purchase Units in the Fund, it shall do so by completing and

delivering to the Fund Manager the following documents:

a. Client Agreement, completed, approved /signed (unless the Investor is an existing client of the

Fund Manager);

b. Completed, approved/ signed Terms and Conditions (unless the Investor is an existing client

of the Fund Manager); and

c. Completed, approved/ signed Subscription Form.

Investors wishing to purchase Units in the Fund shall deliver the abovementioned documents to

the Fund Manager by mail, courier or by hand, or via authorized electronic media.

The subscription application shall be deemed completed when the Fund Manager receives the

abovementioned required documents, in addition to the Subscription Amounts in the specified

accounts numbers of the applicant held with the Fund Manager. After subscription, Unitholders

shall have a confirmation of their Unit holding by the Fund Manager including the subscription

details.

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Each Subscription Date shall depend on the date of receiving the completed subscription

application. In case the completed subscription application is received on or before the deadline for

receiving the applications, the Subscription Date shall be the same Business Day on which the

application is received. In case the completed subscription application is received after the

deadline for receiving the applications, the Subscription Date shall be the following Business Day

The Fund Manager may, based on Anti-Money Laundering and ‘Know Your Customer’ reports or

any instructions from any governmental regulatory bodies, reject subscription applications. In

addition, the Fund Manager may reject any subscription application if such subscription, in its

opinion, may result in a violation of any CMA regulations. In such case, the Subscription Amount

shall be refunded without any fees or deductions within a period of five (5) Business Days from

the date of rejection. The Fund Manager shall have the right to share information pertaining to

Investors with the Custodian for the purposes of satisfying internal audit requirements and Anti-

Money Laundering and Counter-Terrorism requirements.

2. Redemption Process

Unitholders can request redemption of a part or all of their Units by completing and signing a

Redemption Form and delivering to the Fund Manager the completed form by mail, by courier or

hand, or via authorized electronic media.

Each Redemption Date shall depend on the date of receiving the completed Redemption Request. In

case the completed Redemption Request is received on or before the deadline for receiving the

applications, the Redemption Date shall be the same Business Day on which the application is

received. In case the completed Redemption Request is received after the deadline for receiving the

applications, the Redemption Date shall be the following Business Day. In either case, Unitholders

shall have a confirmation by the Fund Manager including the redemption details.

Based on written instruction to a Unitholder, the Fund shall be entitled to compulsory redeem all units

owned by a Unitholder at the applicable redemption price (which will represent the Fund’s net asset

value) if the Fund Manager decides that such action is in the interest of the Fund. Also, the Fund

Manager shall be entitled to compulsory redeem Units in the Fund in any of the following cases:

1. If, in the Fund Manager’s opinion, the continuing ownership of Units by the Investor is

detrimental to the Fund from a financial, tax, legal or regulatory perspective, or in conflict with

these Terms and Conditions and Subscription Agreement; or

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2. If any of the declarations submitted by the Unitholder in their Subscription Agreement are

incorrect or have become invalid.

i. Minimum Number or Value of Units that Unitholder shall Subscribe, Transfer or Redeem

1. Minimum Subscription Amount

The Fund shall have three different Unit Classes:

a. Class A and Class B Units: Such Units shall be issued for Prospective Investors according to these


b. Minimum Initial Subscription of Class A Units: SAR 25,000,000.

c. Minimum Initial Subscription Amount of Class B Units: SAR 1000.

d. Class C Units: Such Units shall be offered and issued only for the directors and officials of the

Fund Manager pursuant to these Terms and Conditions, provided that the Minimum Initial

Subscription Amount shall be SAR 1000.

e. Subsequent Minimum Subscription Amounts for all Unit Classes shall be SAR 100.

2. Minimum Redemption Amount

Minimum Subscription Amount for all Unit Classes shall be SAR 100.

j. Entitlement of Fund Manager to Defer or Suspend Subscription or Redemption Requests

The Fund Manager may, at its absolute discretion, defer any Redemption Request if there has been a

suspension of dealing in the primary market in which the securities or other assets held by the Fund are

traded, either in general or in relation to Assets of the Fund and the Fund Manager reasonably believes

such suspension to be material to the Net Asset Value of the Fund. If any redemption would reduce an

Investor’s investment in the Fund to lower than the Minimum Subscription Amount, such Investor’s

entire Investment will be redeemed. Proceeds of all redemptions will be paid in the Fund's currency by

crediting a Unitholder’s account on any Valuation Day. If the value of Redemption Requests exceeds

10% of the Fund’s Net Asset Value on the previous Valuation Day, the Fund Manager may, at its

26

absolute discretion, defer any Redemption Request on a pro rata basis in order for the total value of

requests not to exceed 10% of the Fund’s Net Asset Value.

Deferred Redemption Requests shall be fulfilled on the following Valuation Day and shall always be

subject to the 10% limit. The valuation of the Assets shall not be later than two Business Days from

the deadline of submitting Redemption Requests.

10. DISTRIBUTION POLICY

The investment objective of the Fund is to provide long-term returns to Unitholders. No profits shall

be distributed, and all net income of the Fund and profits/dividends received by the Fund shall be

reinvested. Reinvestment of income will be reflected in the value and price of Units.

11. REPORTING TO UNITHOLDERS

Relevant Information on Accounting and Financial Reporting

i. The Fund Manager shall prepare annual reports that include the Fund’s audited financial

statements, short-form annual reports and interim reports in accordance with the requirements set

forth in the Investment Funds Regulations.

ii. Interim reports shall be prepared and made available to the public within (35) Business Days

from the end of the period to which the report relates, on the Fund Manager’s website and on the

website of Tadawul.

iii. The Fund Manager shall provide each Unitholder with details of the Net Asset Value of the Units

owned by it and the record of transactions in Fund Units made by it within (15) Business Days of

each transaction in Units of the Fund by the relevant Unitholder.

iv. The Fund Manager shall send to Unitholders (including former unitholders during the year when

such statement was prepared) an annual statement summarizing their transactions in Units in the

Fund during the course of a financial year within (30) Business Days as of the end of the financial

year. Such statement shall include the outline of service fees, expenses, and charges discounted

from the Unitholder, as specified in these Terms and Conditions, in addition to details of all the

violations of investments limitations described in the Investment Funds Regulations and these


v. The Fund Manager shall, at the end of each quarter, disclose information about the Fund on its

27

website or that of Tadawul. The information shall include, at least, the followings:

i. List of issuers which securities constitute the largest ten Investments by the Fund and their

percentages as on the first day of the quarter.

ii. Percentage of total fees and charges of the relevant quarter to the average of the Fund’s Net Asset

Value.

iii. Amount and percentage of profits distributed during the quarter in question, if any.

iv. Value of the Fund Manager’s investments and percentage of the Net Asset Value as at the end of

the relevant quarter.

v. Amount and percentage of the relevant quarter’s dealing expenses to the Fund’s average Net

Asset Value.

vi. Standards and index to measure the risks.

vii. Fund’s performance standards and index.

viii. Percentage of leverage to the Fund’s Net Assets Value at the end of the relevant quarter.

The audited financial statements shall be available for unitholders upon request free of charge.

12. UNITHOLDERS REGISTER

The Fund Manager shall maintain a register of Unitholders in the Kingdom and such register shall be

conclusive evidence as to the persons entitlement to Units in the Fund.

13. MEETING OF UNITHOLDERS

i. Calling of a Unitholders Meeting

The Fund Manager may call for a meeting of Unitholders at its own discretion.

ii. Processes and Procedures for Calling of a Meeting of Unitholders

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i. The Fund Manager shall call for a meeting of Unitholders within (10) days of receiving a

written request from the Custodian.

ii. The Fund Manager shall call for a meeting of Unitholders within (10) days of receiving a

written request from Unitholders holding together at least 25% of the Fund Units value.

iii. The Fund Manager shall call for a meeting of Unitholders by announcing it on its website and

that of Tadawul, and by sending a notice in writing to all Unitholders and the Custodian giving

(1) not less than (10) days’ notice of the meeting; (2) and no more than (21) days’ notice before

the meeting. The announcement and notice shall specify the date, place and time of the meeting

and the proposed agenda for the meeting. The Fund Manager shall, at the same time as sending

a notice to Unitholders regarding any meeting of Unitholders, also send a copy of any such

notice to CMA.

iv. The quorum required to conduct a meeting of Unitholders shall be such number of Unitholders

holding together at least 25% in value of the units in the fund or greater percentage as specified

in the terms and conditions and the information memorandum of the public fund.

v. If the quorum requirements set out in this Clause are not met, the Fund Manager shall call for a

second meeting by announcing it on its website and that of Tadawul and shall send a notice in

writing to all Unitholders and the Custodian giving not less than (5) days' notice of the second

meeting (excluding the day on which the notice is sent and the day of the meeting). At the

second meeting, any number of Unitholder(s) holding any number of Units present in person or

represented by a proxy shall form a quorum.

vi. Every Unitholder shall be entitled to appoint a proxy to represent such Unitholder at a meeting

of the Unitholders.

iii. Manner of Casting Votes and Voting Rights

Every Unitholder shall be entitled to exercise one vote at the meeting of Unitholders for each Unit which

the Unitholder holds as at the time of the meeting.

Unitholders meetings, its deliberations and voting on decisions may be conducted through modern

technology means in accordance with requirements set by CMA.

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14. UNITHOLDERS’ RIGHTS

Units grant their holders no voting rights with respect to the Fund other than matters presented to them in

Unitholder meetings as outlined in Clause 17 of Terms and Conditions.

15. UNITHOLDERS’ LIABILITY

Unitholders shall not be liable for the debts and obligations of the Fund and their liability shall only be

limited to the loss of their Investments in the Fund.

16. UNIT CHARACTERISTICS

The Fund Manager may issue an unlimited number of Units in the Fund, all of same class, pursuant to

Information Memorandum and Terms and Conditions. Each Unit represents an equal common interest in

the Fund. Units may be redeemed only from the Fund Manager and are not transferable from one class to

another. The Fund Manager may not terminate any class.

Units are divided into the following three classes:

a. Class A Units: These Units are issued to Investors pursuant to Information Memorandum with an

investment value of no less than SAR 25,000,000.

b. Class B Units: These Units are issued to Investors pursuant to Information Memorandum with an

investment value of no less than SAR 1000.

c. Class C Units: These Units are issued to managers, senior executives and employees of the Fund

Manager. These Units can only be issued at the Fund Manager’s discretion in return for a Minimum

Subscription Amount of SAR 1000.

The Fund Manager shall not issue ownership certificates for Units in the Fund, but the Fund Manager shall

maintain a register of all Unitholders. Following every transaction carried out by an Investor, such Investor

shall receive a confirmation in writing containing full details of the transaction. If and when the Fund is

liquidated, all Investor’s Units shall be entitled to a proportionate share in the Net Asset Value of the Fund

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made available for distribution to Unitholders; meaning that Unitholders’ rights in the Fund’s net assets

shall be equal.

17. CHANGES TO THE FUND'S TERMS AND CONDITIONS

a. Approval by CMA and Unitholders’ Consent to Fundamental Changes

The Fund Manager shall obtain the consent of Unitholders to any proposed or Fundamental Change(s) to

these Terms and Conditions by way of an Ordinary Fund Resolution.

Following the approval of Unitholders pursuant to an Ordinary Fund Resolution, the Fund Manager shall

obtain the consent of CMA to the proposed Fundamental Change.

For the purposes of these Terms and Conditions, “Fundamental Change” means:

i. a change which significantly changes the purposes or nature of the Fund;

ii. a change which may have a material adverse effect on Unitholders or their rights;

iii. a change which alters the risk profile of the Fund;

iv. the voluntary withdrawal of a Fund Manager from its position as the Fund Manager; or

v. any other instances determined by CMA from time to time and reported to the Fund Manager.

The Fund Manager shall notify Unitholders and disclose details of Fundamental Change(s) on its website

and that of Tadawul within ten (10) Business Days before the date on which the change becomes effective.

Details of all Fundamental Changes shall be included in the report following the date on which

fundamental changes become effective, as prepared by the Fund Manager pursuant to Clause (11) of these


Notwithstanding paragraph 7(b)(ii) of these Terms and Conditions, Unitholders shall be entitled to redeem

their Units before any Fundamental Changes become effective; without incurring any redemption fees.

b. Notification to CMA and Unitholders’ Consent to Significant Changes

The Fund Manager shall notify in writing the CMA and Unitholders of any proposed significant changes to

the Fund. The notice period for notifications to both CMA and Unitholders of a significant change shall

31

not be less than (21) Business Days prior to the day on which the Fund Manager intends to make such

change.

For the purposes of these Terms and Conditions, “Significant Change” means a change which is not a

Fundamental Change in these Terms and Conditions, but which:

i. would reasonably be expected to cause Unitholders to reconsider their participation in the Fund;

ii. results in any increased payments out of the Fund’s Assets to the Fund Manager or any member of

the Fund Board or an affiliate thereof;

iii. introduces any new type of payment out of the Fund’s Assets;

iv. materially increases other types of payment out of the Fund’s Assets; or

v. any other cases determined by CMA from time to time and reported to the Fund Manager.

The details of Significant Changes shall be disclosed (10) Business Days before the date on which the

change becomes effective, on the Fund manager's website and on Tadawul’s website and other means

mandated by CMA.

Details of all Significant Changes shall be included in the report following the date on which Significant

Changes become effective pursuant to Clause (11) of these Terms and Conditions.

Notwithstanding paragraph 7(b)(ii) of these Terms and Conditions, Unitholders shall be entitled to redeem

their Units before any Significant Changes are effective; without incurring any redemption fees.

c. Notification to CMA and Unitholders’ Consent to Notifiable Changes

The Fund Manager shall notify the CMA in writing of any Notifiable Changes to the Fund within (10)

Business Days of such Notifiable Change taking effect. For the purposes of these Terms and Conditions,

“Notifiable Change” means any change other than a Fundamental Change or Significant Change.

Details of Notifiable Changes shall be disclosed on the Fund Manager's website and that of Tadawul

within twenty-one (21) Business Days of the Notifiable Change taking effect.

Details of all Notifiable Changes shall be included in the report following the date on which the changes

become effective pursuant to Clause 11 of these Terms and Conditions.

32

18. TERMINATION OF THE FUND

The Fund Manager shall give Unitholders and CMA at least twenty-one (21) Business Days written notice

of the intention to terminate the Fund, without prejudice to the Fund’s Terms and Conditions.

Notwithstanding the preceding paragraph, the Fund Manager shall terminate the Fund if the Net Asset

Value of the Fund continues to be less than ten million Saudi Arabian Riyals (SAR 10,000,000) for six (6)

months from the date of notice issued by the Fund Manager to CMA informing it of the fact that the Fund

Net Asset Value is less than ten million Saudi Arabian Riyals (SAR 10,000,000).

The Fund Manager shall commence liquidation of the Fund upon its termination, without prejudice to

these Terms and Conditions. The Fund Manager shall disclose on its website and that of Tadawul,

termination of the Fund and the timeline for liquidating it.

19. FUND MANAGER

a. Functions, Duties and Responsibilities of Fund Manager

a. The Fund Manager shall act for the benefit of Unitholders in accordance with the Investment Funds

Regulations, the Authorized Persons Regulations, the Terms and Conditions and the Information

Memorandum.

b. The Fund Manager shall comply with all principles and duties required under Authorised Persons

Regulations, including the fiduciary duty towards Unitholders which includes the duty to act in the

best interests of Unitholders and duty to exercise all reasonable care and skill.

c. With respect to the Fund, the Fund Manager's responsibilities shall include:

a. Fund management;

b. Fund operations, including administrative services to the Fund;

c. Offering of Units; and

d. Ensuring the accuracy of these Terms and Conditions and the Information Memorandum and

verifying that these Terms and Conditions are complete, clear, accurate, and not misleading.

b. Right of the Fund Manager to Appoint a Fund Sub-Manager

33

Any delegation of the Fund Manager’s responsibilities and duties to any other person pursuant to the

Investment Funds Regulations shall not in any way limit, reduce or satisfy the Fund Manager’s

responsibilities under the Investment Funds Regulations and the Authorized Persons Regulations.

c. Provisions Governing Removal/Replacement of Fund Manager

The CMA shall have the power to remove the Fund Manager and take any action it deems appropriate

to appoint a replacement Fund Manager or to take any other measures it deems necessary in the event

of:

- The Fund Manager ceases to carry on management activities without notification to CMA under the

Authorized Persons Regulations;

- The cancellation by CMA of the Fund Manager’s relevant authorization(s) to carry out management

activities under the Authorised Persons Regulations;

- A request by the Fund Manager to CMA to cancel its relevant authorization to carry out management

activities;

- The CMA believes that the Fund Manager has failed, in a manner which CMA considers material, to

comply with the Capital Market Law or its Implementing Regulations;

- Death, incapacity or resignation of a portfolio manager who manages Fund’s Assets, if no other

registered person employed by the Fund Manager can manage Fund’s Assets or assets of funds

managed by the portfolio manager; or

- Any other event determined by CMA on reasonable grounds to be of sufficient material importance.

Notice of any event described in sub-paragraph (v) of paragraph (c) of this Clause shall be provided by

the Fund Manager to CMA within (2) Business Days of its occurrence.

If CMA exercises its power pursuant to paragraph (c) of this Clause, the relevant Fund Manager shall

fully co-operate in order to help facilitate a smooth transfer of responsibilities to the replacement Fund

Manager during the initial (45) Business Day period after the appointment of the replacement Fund

Manager. The Fund Manager shall, where necessary and applicable and at the discretion of CMA,

transfer all of the contracts relating to the Fund and to which it is a party, to the replacement Fund

Manager.

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20. CUSTODIAN

The Fund Manager has appointed HSBC Saudi Arabia Ltd in the Kingdom (the “Custodian”) to take

custody of Fund’s Assets. The Custodian and/or the Fund Manager may appoint sub-custodians or other

custodians to hold Fund’s Assets located outside the Kingdom.

a. Functions, Duties and Responsibilities of Custodian

The Custodian shall be responsible for keeping and protecting Fund’s Assets located in the Kingdom on

behalf of Unitholders and taking all administrative measures in relation to the custody of the Fund's Assets.

b. Right of Custodian to Appoint a Sub-Custodian

The Custodian may delegate its duties and responsibilities toward the Fund to one or more third parties or

affiliates as a Fund Sub-Custodian. Notwithstanding such delegation under the Investment Funds

Regulations or Authorized Persons Regulations, the Custodian shall remain fully responsible for

compliance with the provisions of the Investment Funds Regulations. The Custodian shall be held

responsible to the Fund Manager and Unitholders for any losses caused to the Fund due to the Custodian’s

negligence, fraud or wilful misconduct, and the remuneration of the Sub-Custodian shall be paid by the

Custodian out of its own resources.

A Fund Sub-Custodian operating in a jurisdiction other than the Kingdom can be appointed to take custody

of Fund's Assets in relation to Fund's foreign Investments and shall be appointed pursuant to a contract in

writing and shall be established, authorized and supervised in a jurisdiction that employs regulatory

standards and requirements at least equivalent to those of CMA.

c. Provisions Governing Removal/Replacement of Custodian

The CMA shall have the power to remove the Custodian and take any other measures it deems necessary,

as appropriate, in the event of:

i. The Custodian ceases to carry on custody activity without notification to CMA under the Authorised

Persons Regulations;

ii. The cancellation or suspension by CMA of the Custodian’s relevant authorization to carry out custody

activity under the Authorised Persons Regulations;

iii. A request by the Custodian to CMA to cancel its authorization to carry out custody activity;

iv. The CMA believes that the Custodian has failed, in a manner which CMA considers material, to

comply with the Capital Market Law or its Implementing Regulations; or

v. Any other event determined by CMA – based on reasonable grounds - to be of sufficient material

importance.

35

If CMA exercises its power pursuant to paragraph C (i) of this Clause, the relevant Fund Manager shall

appoint a replacement Custodian to the Fund in accordance with CMA instructions, and the Fund Manager

as well as the Custodian being discharged shall co-operate fully in order to facilitate a smooth transfer of

responsibilities to the replacement Custodian during the first (60) Business Days of appointing the

replacement Custodian. The Custodian shall transfer, where CMA decides it is necessary and applicable,

all contracts related to the Fund and which it is party to, to the replacement Custodian.

In addition to removal or replacement by CMA, the Custodian appointed by the Fund Manager shall be

subject to removal by written notice by the Fund Manager upon the Fund Manager forming the reasonable

opinion that the removal is for the interest of Unitholders. The Fund Manager shall immediately notify

CMA and Unitholders in writing and the Fund Manager shall disclose such removal immediately on its

website and that of Tadawul.

Upon receipt by the Custodian of a notice issued under paragraph C (i) of this Clause, the Fund Manager

shall terminate the appointment of the Custodian within (30) Business Days of such notification and

appoint another Custodian. The Custodian being discharged shall fully co-operate with the Fund Manager

in order to facilitate a smooth transfer of responsibilities to the replacement Custodian, and shall transfer,

where necessary and applicable, all contracts related to the Fund which it is party to, to the replacement

Custodian.

In case of removal or replacement of the Custodian by the Fund Manager, the Fund Manager shall disclose

such circumstances immediately on its website and that of Tadawul.

21. AUDITOR

a. Name of Fund’s Auditor

The Fund Manager has appointed KPMG Al Fozan and Partners as auditor of the Fund (the “Auditor”).

b. Functions, Duties and Responsibilities of Auditor

The Auditor shall be responsible for the following:

i. Conducting an audit on the Fund with the objective of expressing an opinion on the financial

statements to Unitholders on whether the financial statements present fairly, from all material respects,

36

the financial position, results of operations and cash flow information in accordance with the generally

accepted accounting standards in the Kingdom;

ii. Evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by the Fund as well as evaluating the overall presentation of the financial statements;

iii. Considering internal controls relevant to the preparation of the financial statements of the Fund in

order to design procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the Fund’s internal controls; and

iv. Reviewing the interim condensed financial statements of the Fund in accordance with the Saudi

Organization for Certified Public Accountants (“SOCPA”) standards for review of interim financial

information.

c. Replacement of Auditor

The appointment or the substitution of any Auditor shall be approved by the Fund Board. The Fund Board

shall reject the appointment of an Auditor, or instruct the Fund Manager to replace an Auditor which has

already been appointed, if:

i. There are any outstanding and significant allegations of professional misconduct in relation to

audit functions by the Auditor;

ii. The Auditor ceases to be an independent auditor;

iii. The Fund Board determines that the Auditor does not have sufficient qualifications and experience

to perform a satisfactory auditing functions; or

iv. The CMA, at its absolute discretion, instructs the Fund Manager to replace the Auditor.

The Audit Fees payable to the Auditor shall be determined by the Fund Manager following the approval of

the Fund Board.

22. FUND'S ASSETS

a. The Fund Assets shall be held by the Custodian on behalf of the Fund.

b. The Fund Assets shall be segregated from the Custodian’s own assets and assets of other clients. Fund’s

Assets shall be owned collectively by Unitholders. The Fund Manager, Fund Sub-Manager, Custodian,

Sub-Custodian, Distributor or Investment Advisor shall not have any interest in or claims against

37

Fund’s Assets, other than when the Fund Manager, Fund Sub-Manager or Custodian is a Unitholder,

and for claims permitted under the Investment Funds Regulations and disclosed in these terms and

conditions.

23. Unitholder’s Acknowledgment

Unitholders acknowledge that they have reviewed Fund’s Terms and Conditions, Information

Memorandum and Fact Sheet and that they approved characteristics of Units to which they subscribed.





38

Annex 1 - Shariah Investment Guidelines

Shariah Group

In the name of God, the Most Gracious, the Most Merciful

Shariah Guidelines for Equity Investment

The Shariah Board believes that it is permissible to buy and sell shares of joint stock companies carrying

out permissible businesses in accordance with the following guidelines:

Guideline I- Nature of Business

Investment should be limited to companies that carry out permissible business, such as production of

beneficial goods and services in areas of industry, agriculture, trade…etc. Investment is not allowed in

companies whose main activity is one or more of the following:

i. Carrying out financial activities that are not Shariah compliant such as traditional banks that offer

interest-bearing products or financial instruments that violate Shariah rules, and traditional

insurance companies;

ii. Production and distribution of alcohol or tobacco;

iii. Production and distribution of pork and its derivatives;

iv. Production and distribution of meat not slaughtered according to Shariah rules;

v. Managing casinos, gambling halls and production of related tools;

vi. Production and distribution of pornographic films, books and magazines, satellite channels and

cinemas;

vii. Manufacture and sale of weapons;

viii. Restaurants, hotels and places of entertainment that provide prohibited services such as sale of

alcohol…etc; and

ix. Any other activity that Shariah Board believes it is not permissible to invest in.

39

Guideline II- Money and Debts

The Fund may not invest in shares of companies where the sum of cash and receivables exceeds 70% of

the company’s market value (preceding 36-month average).

Guideline III- Loans

The Fund may not invest in shares of companies where the sum of interest-bearing loans, according to

their budget, exceeds 33% of the company’s market value (preceding 36-month average).

Guideline IV- Liquid Money Investment

The Fund may not invest in shares of companies where the sum of liquid money investment in short term

instruments such as bank deposits and interest-bearing securities exceeds 33% of the company’s market

value (preceding 36-month average).

Guideline V- Impure Income

The Fund may not invest in shares of companies where impure income of all sources exceeds 5% of the

company’s total income, whether such sources are generated from interest-bearing instruments or other

prohibited sources.

Guideline VI- Purification

Impure income shall be determined and deposited in in a special account in order to be distributed to

charitable activities. Impurification shall be performed pursuant to the following steps:

i. Determining the amount of impure income for each company in which the Fund has invested;

ii. Dividing the amount of impure income for the company by total number of shares to determine the

share’s proportion in impure income;

iii. Multiplying the outcome by shares of the company invested in to determine total impure income

resulting from investing in the company;

iv. Repeating the same steps with each company invested in; and

v. Collecting the total impure income for all companies invested in and allocating the same for

charitable activities.

Guideline VII- Instruments and Methods of Investment

40

Sale and purchase of shares shall not be allowed using the following investment tools:

a. Futures contracts

b. Options contracts

c. SWAPs

d. Preferred stocks

e. Short selling

41

Annex 2 – Subscription Form

42

Annex 3 – Redemption Form

43

Annex 4 – Investor Confirmation

I / we have read and understood the above Terms and Conditions and confirm my /our acceptance by

signing a copy thereof.

Client/Investor’s Name: ________________________________________________________

Signature: ____________________________

Date: __________________________________

For Company: __________________________________________________________

Authorized Signatory(ies):____________________________________________________

Company’s Stamp: __________________________________

Address: _____________________________________________________________________

Email: ________________________________

Mobile: _________________________________

Phone Number: ________________________

Fax Number: ___________________________

ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ

A Saudi Closed Joint Stock Company, licensed by the Capital Market Authority, with a Capital of SAR

852,735,000.

Head Office: Phone +966 11 279 1111 Fax +966 11 279 1571 P.O. Box 60677, Riyadh 11555, Kingdom of Saudi

Arabia

44

He

Information Memorandum

A Saudi Closed Joint Stock Company, licensed by the Capital Market Authority, with a

Capital of SAR 852,735,000.

Head Office: Phone +966 11 279 1111 Fax +966 11 279 1571 P.O. Box 60677, Riyadh

11555, Kingdom of Saudi Arabia.


45

Information Memorandum

An Open-Ended Investment Fund Publicly Offered under the Investment Funds

Regulations

All praise is due to Allah, the Cherisher of world, and peace and blessing be upon the prophet

of Allah, on his family and all his companions.

Fund Manager


Custodian

HSBC Saudi Arabia Ltd

Date of Issuance: June 30, 2007 G/ Jumada al-Thani 15, 1428 H

This Information Memorandum is subject to the Investment Funds Regulations issued by CMA

pursuant to the provisions of the Capital Market Law, issued by Resolution No. 1-219-2006

dated 03/12/1427 H as amended by Resolution No. 1-61-2016 dated 16/08/1437 H

corresponding to 23/05/2016 G

We advise Prospective Investors to read and understand the information contained in the

Information Memorandum. If the contents of the Information Memorandum cannot be

understood, we recommend that you consult a professional counselor.

This is a translated version of the Information Memorandum. In the event of discrepancy

between the English version and the Arabic version of this Information Memorandum, the

Arabic version shall prevail.






46

Notice

This Information Memorandum has been reviewed and approved by the Fund Board. The Fund

Manager and members of the Fund Board shall jointly and severally bear full responsibility for the

accuracy and completeness of the information contained herein. Further, they acknowledge and

confirm that the information contained herein is not misleading.

The CMA approved the establishment of the Fund and offering of Units thereof. The CMA shall

have no responsibility for the contents of the Information Memorandum. Further, it does not make

any representation as to the accuracy or completeness of this document, and expressly disclaims

any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this

document. The CMA provides no recommendation on the feasibility of investing in the Fund and its

approval of the establishment of the Fund does not mean that it recommends investors to invest in

the Fund or that it confirms the correctness of the information contained in the Terms &

Conditions and the Information Memorandum. We confirm that the decision to invest in the Fund

must only be made by the Investor or a representative thereof.

Jadwa Saudi Equity Fund has been approved by the Shariah Board of the Fund.

47

Table of Contents

24. Investment Fund .......................................................................................................................... 53

25. Fund Investment Policies And Practices ..................................................................................... 53

26. Key Risks Of Investing In The Fund ........................................................................................... 60

27. General Information .................................................................................................................... 66

28. Fees, Charges And Expenses ....................................................................................................... 69

29. Valuation And Pricing ................................................................................................................. 73

30. Dealings ....................................................................................................................................... 74

31. Unit Characteristics ..................................................................................................................... 77

32. Accounting And Financial Reporting .......................................................................................... 78

33. Fund Board .................................................................................................................................. 79

34. Shariah a Board ........................................................................................................................... 83

35. Fund Manager .............................................................................................................................. 84

36. Custodian ..................................................................................................................................... 90

37. Auditor......................................................................................................................................... 92

38. Other Information ........................................................................................................................ 92

Annex 1 – Investor Confirmation ............................................................................................................... 96

48

Definitions

The following terms shall have the meanings given to them below when used herein:

“Administrator” means HSBC Saudi Arabia Ltd acting as Administrator of the Fund;

“Auditor” means the auditor of the Fund as appointed by the Fund Manager;

“Authorized Persons Regulations” means Authorized Persons regulations issued by CMA under resolution

number 1-83-2005 on 21/05/1426 H (corresponding to 28/06/2005 G) as amended from time to time;

“Business Day” means any working day of Saudi Stock Exchange “Tadawul”;

“Capital Market Law” means the Capital Market Law issued pursuant to Royal Decree No. m/30 dated 2/6/1424

H (as amended from time to time);

“Class A Units” means a class of Units which grants Unitholders certain rights and entails certain obligations as


“Class B Units” means a class of Units which grants Unitholders certain rights and entails certain obligations as


“Class C Units” means a class of Units which grants Unitholders certain rights and entails certain obligations as


“Account Opening Agreement” means the agreement concluded between Unitholder and the Fund Manager

which includes the Terms and Conditions, regulates the relationship between Unitholder and the Fund Manager

and illustrates obligations and liabilities thereof;

“Client Agreement” means the agreement concluded between Unitholder and the Fund Manager which includes

the Terms and Conditions, regulates the relationship between Unitholder and the Fund Manager, and illustrates

obligations and liabilities thereof;

“CMA” means the Capital Market Authority including, wherever the context so permits, any committee or

subcommittee, employee or agent authorized by CMA;

“Custodian” means HSBC Saudi Arabia Ltd acting as custodian to the Fund and it is a person licensed under the

Authorized Persons Regulations to carry out securities custody activities;

“Fund” means Jadwa Saudi Equity Fund;

“Fund Board” means the board of directors of the Fund;

“Fund Manager” means Jadwa Investment Company acting as Fund Manager;

“Implementing Regulations” means the Implementing Regulations issued pursuant to the Capital Market Law;

“Index” means the Index based upon which the performance of the Fund is measured;

“Information Memorandum” means the Information Memorandum issued in connection with the offering of

Units in the Fund, in compliance with the Investment Funds Regulations;

49

“Initial Offering” means initial offering of securities, offered publicly for subscription for the first time in the

primary market;

“Secondary Offering” means any subsequent offering of securities in the capital market;

“Initial Offering Date” means the date on which Units in the Fund shall be offered for subscription;

“Investment”, “Investments”, “Assets” are synonymous terms used interchangeably, each of which is used to

refer to targeted securities in which the Fund invests;

“Investment Funds Regulations” means the regulations issued by CMA board pursuant to Capital Market

Regulation issued pursuant to resolution number 1-219-2006 on 3/12/1427 H as amended by Resolution No.

1/61/2016 dated 16/8/1437 H corresponding to 23/5/2016 G (as amended from time to time);

“Investment Grade Credit Rating” means certified rating from a local/international credit rating agency proving

an issuer’s credit worthiness and ability to meet its obligations to security holders, such as S&P, Moody’s and

Fitch. Minimum rating is –BBB or its equivalent;

“Investor”, “Investors” and “Unitholder” are all synonymous terms used interchangeably, each of which is

used to refer to the client who invests and holds Units in the Fund;

“Kingdom” and “Saudi Arabia” means the Kingdom of Saudi Arabia;

“Related Parties” means the Fund Manager’s directors, officials or employees;

“Murabaha” means a Shariah compliant deposit;

“Net Asset Value” means the value of the Fund’s total assets minus the value of the Fund’s total liabilities;

“Open-Ended Investment Fund” means an investment fund with changing capital, the units of which increase

with the issuance of new units, and decrease with redemption by unitholders of some or all of their units;

“Ordinary Fund Resolution” refers to the meaning set out in the glossary used in CMA regulations and rules;

“Rights Issuance” means rights issued for the purposes of increasing share capital;

“Redemption Date” means the date on which a Unitholder redeems its Units;

“Redemption Form” means the document submitted by the Fund Manager to every Unitholder, according to

which the latter requests Units to be redeemed according to the Terms and Conditions, the form of which is

attached as Annex 3 of the Terms and Conditions;

“Redemption Request” means a request submitted by a Unitholder to redeem its Units in the Fund;

“SAMA” means the Saudi Arabian Monetary Agency;

“Shariah Board” means the Shariah Advisory Board of the Fund Manager;

“Shariah Investment Guidelines” means guidelines set out in Annex 1 of the Terms and Conditions;

“Subscription Amount” means the amount invested by a Unitholder in the Fund;

50

“Subscription Date” means the date on which a Unitholder subscribes to the Fund;

“Subscription Form” means the document submitted by the Fund Manager to every Investor, according to which

the Investor requests to subscribe for Units according to the Terms and Conditions, the form of which is attached

as Annex 2 of the Terms and Conditions;

“Subscription Price” means the net asset value per Unit on the relevant Subscription Date;

“Tadawul” means the Saudi Arabian Stock Exchange;

“Terms and Conditions” mean the Terms and Conditions of Jadwa Saudi Equity Fund updated on 22/02/2018

G/19/11/1438 H unless otherwise mentioned;

“Unit” means the proportional share of the Unitholders in the Fund. Each Unit (including fractions of a Unit) is

treated as representing one proportional share in the Net Assets of the Fund; and

“Unit Classes” means Class A, Class B, and Class C Units in the Fund collectively;

51

Executive Summary

Fund Name Jadwa Saudi Equity Fund.

Fund Manager Jadwa Investment Company.

Custodian HSBC Saudi Arabia Ltd.

Administrator HSBC Saudi Arabia Ltd.

Fund Currency Saudi Arabian Riyal.

Investment Objectives Achieving long term capital appreciation for Unitholders through

investing in equities of companies listed on Saudi Arabian Stock

Exchange and equities of Saudi companies listed on other stock

exchanges or any affiliates thereof in accordance with investment

Shariah a principles.

Fund Benchmark Index S&P Index for Saudi Shariah compliant equities (total return).

Risk Level High. For more information, please refer to the risk factors set forth in

Clause 3 of the Information Memorandum.

Investment Suitability Due to the high level of risks related to investment in the Fund as

further explained in the Information Memorandum, investment in the

Fund may not be suitable for Investors who are unable or don’t desire

to experience high risks. Prospective Investors have to request advice

from investment consultants in connection with the risk factors set

forth in Clause 3 of the Information Memorandum.

Minimum Initial Subscription

Amount

Class (A) Units: SAR 25,000,000 per Investor.

Class (B) Units: SAR 1000 per Investor.

Class (C) Units: SAR 1000 per Investor. Such Units are allocated to

Related Parties.

Minimum Additional

Subscription Amount


Minimum Redemption

Amount


Application Submission

Deadline

Before 10 am (Riyadh local time) on the Valuation Day.

Valuation Day All Business Days in the Kingdom.

52

Subscription Day All Business Days in the Kingdom.

Redemption Day All Business Days in the Kingdom.

Payment Day Within five Business Days following the Valuation Day.

Subscription Fee Not exceeding 3 % of the Subscription Amount.

Management Fee Class (A) Units: 1.25 % per year.

Class (B) Units: 1.95% per year.

Class (C) Units: 0.98% per year. Such Units are allocated to Related Parties.

Redemption Fee 1% of the value of the redeemed units. An early Redemption Fee

shall be applicable only to Units redeemed within 30 days from the

date of purchase.

Transaction Fee The Fund shall bear all Transaction Fees, expenses and commissions

incurred upon the purchase or sale of securities at actual cost.

Other expenses The Fund shall be liable for its operational, professional and other

administrative expenses, including, but not limited to, legal and tax

consultancy expenses, other charges, taxes, zakat, profit purification,

litigation expenses, publication and index calculation.

Initial Offering Date May 16, 2007 G- 28/04/1428 H

Unit Price on the Date of

Issue of these Terms and

Conditions

Class (A) Units: SAR 100

Class (B) Units: SAR 100

Class (C) Units: SAR 100

53

24. INVESTMENT FUND

a. Name of Fund

The name of the Fund is Jadwa Saudi Equity Fund.

b. Date of Issuance and Amendment

Terms and Conditions have been issued on June 30, 2007 G (Jumada al-Thani 15, 1428 H) and updated on

February 22, 2018 G (Jumada al-Thani 6, 1439 H).

c. CMA Approval of Fund Establishment and Offering of Units Thereof

The CMA approved establishment of the Fund and issuance of Units on March 11, 2007 G/ Safar 21, 1428

H.

d. Fund Term

The term of the Fund is perpetual.

e. Fund Currency

The currency of the Fund shall be Saudi Arabian Riyal (SAR).

25. FUND INVESTMENT POLICIES AND PRACTICES

a. Fund Investment Objectives

As an Open-Ended Investment Fund, the primary investment objective of the Fund is to provide long-term

capital appreciation for Unitholders by investing in shares of companies listed on Saudi Stock Exchange

and Saudi companies or any of their affiliates which are listed on any other stock exchange in accordance

with Shariah Investment Guidelines stipulated in Annex 1 of Terms and Conditions. In addition, the Fund

may invest in short-term Murabaha transactions. The Fund’s objective is to transcend the benchmark

index. Unitholder shall not receive any profits as all net profits as well as dividends and revenues shall be

reinvested.

The Index: The S&P Saudi Arabia Domestic Shariah Index (Total Return) is used and Investors may have

access to the Index information and the Fund Manger’s performance on the website of Jadwa Investment

Company (www.jadwa.com ).


54

b. Securities to be primarily Invested in by the Fund

i. The Fund aims to invest in the following target securities (“Target Securities”):

a. Shares of companies listed on any Saudi stock exchange (including main markets, any parallel

markets and any other market that may be introduced by competent authorities in the future on

which public equity securities are listed/traded) or shares and/or depository receipts of Saudi

companies and/or their subsidiaries/affiliates listed on any other stock market in the world;

b. Shares offered through initial public offering (IPOs) or secondary offering of Saudi companies that

are to be listed on Saudi Stock Exchange (including main markets, any parallel markets and any

other market that may be introduced by competent authorities in the future on which public equity

securities are listed/traded) or offerings of shares and/or depository receipts of Saudi companies

and/or their subsidiaries/affiliates that are to be listed on any other stock market in the world;

c. Rights issued to increase capital of Saudi companies that are listed or to be listed on any Saudi

stock exchange (including main markets, any parallel markets and any other market that may be

introduced by competent authorities in the future on which such securities are listed/traded) or

rights of Saudi companies and/or their subsidiaries that are listed or to be listed on any other stock

market in the world;

d. Real Estate Investment Traded Funds (REITs) that are listed or to be listed on any Saudi stock

exchange (including main markets, any parallel markets and any other market that may be

introduced by competent authorities in the future on which such securities are listed/traded);

e. The Fund may invest in other Shariah compliant Saudi equity funds, listed on any Saudi stock

exchange (including main markets, any parallel markets and any other market that may be

introduced by competent authorities in the future on which public equity securities are

listed/traded), that are publicly offered and licensed by relevant competent authorities, provided

that all such investments together do not exceed 50% of the Fund’s Net Asset Value at the time of

investment. Moreover, at the time of investment, Fund’s exposure to a single fund shall be no

more than 25% and the Fund shall not own more than 20% of another fund for its own benefit.

f. Any other financial instrument(s) related to securities explained under (a), (b), (c), (d) and (e) that

are listed or to be listed on any Saudi stock exchange (including main markets, any parallel

markets and any other market that may be introduced by competent authorities in the future on

which such securities are listed/traded);

ii. The Fund Manager may reduce minimum investment in securities explained under (a), (b), (c), (d), (e) and

(f) of clause i of this article, from 30% to 0% in the following cases:

55

a. In cases where the Fund Manager expects a sharp drop in financial markets due to

international or regional economic or political conditions;

b. In cases where investment opportunities that fit the Fund's objectives are not available;

c. Any other reason deemed appropriate by the Fund Manager to protect Investors’ interests

which may include, bankruptcy of any leading local company, or bankruptcy of large-

scale local bank, or the Fund Manager expects a sharp decline/deterioration in the state of

local economy which in turn directly or indirectly affects Fund’s Investments.

iii. If the Fund Manager decides to reduce minimum investment in securities explained under (a), (b), (c), (d),

(e) and (f) under clause i of this article from 30% to 0%, the Fund Manager may allocate all assets of the

Fund in cash or to short-term Murabaha transactions

iv. The Fund Manager may distribute all its assets in short-term Murabaha cash transactions in the following

cases, for example without limitation:

a. Decline in the performance of the Saudi Stock Exchange;

b. Diversification of the Fund's investments to benefit from the proceeds of money markets.

v. The following table sums up the Fund’s investment limits.

Type of Investment Description Minimum

of Fund

Assets

Maximum

of Fund

Assets

Securities Explained

under Sub-Clauses

(a), (b), (c), (d) and

(e) of Clause i of this

Article.













[30] % [100] %

56






Short-Term

Murabaha

Transactions


















[0] % [70] %

Similar Saudi

Equity Funds.

Saudi equity funds licensed by competent

authorities. At the time of investment, no more

than 25% of Fund’s net Assets will be invested

in a single Saudi equity fund and the Fund

shall not own more than 20% of a fund for its

own benefit.

[0] % [50] %

Cash Liquidity

Funds.

Cash exposure will be maintained by the Fund

Manager as deemed appropriate. The exposure

limits mentioned are subject to exceptions

mentioned in clause ii and iii of this Article.

[0] % [70] %

57

*Money market tools at banks licensed by SAMA are all rated (Investment Grade Credit Rating).

Therefore, the Fund shall not invest in unrated Murabaha transactions.

*For avoidance of doubt, subsidiaries/affiliates, used above, shall have the meaning given to them in the

Glossary of Defined Terms Used in the Regulations and Rules of CMA.

vi. Subject to the limits mentioned above, the Fund Manager shall make investment decisions as it deems

appropriate at its sole discretion.

vii. The Fund's assets vary in terms of the nature of investment into long-term and short-term investments in the

Stock Exchange. The Fund's assets will be divided into securities in which the Fund makes long term

investments, and which will be contained in portfolios and securities in which the Fund invests for liquidity

and trading purposes.

c. Investment Concentration Policy

a. The Fund Manager shall comply with restrictions/limitations that apply on the Fund and are outlined in

Investment Funds Regulations, these Terms and Conditions, including Shariah Investment Guidelines

and Information Memorandum.

b. No more than 25% of the Fund’s Net Asset Value may be invested in Units of other Investment Fund.

c. No more than 20% of the Net Asset Value of the Units of another investment fund may be held for the

benefit of the Fund.

d. No more than 20% of the Fund’s Net Asset Value may be invested in all classes of securities issued by

any single issuer.

e. No more than 10% of the Net Asset Value of the Fund may be held in securities issued by any single

issuer for the benefit of the Fund.

f. Not more than 25% of the Fund’s Net Asset Value may be invested in different parties belonging to

the same group, including all Investments in securities issued by different parties belonging to the

same group and money market transactions, subject to a party regulated by SAMA or equivalent

regulator in a jurisdiction other than the Kingdom, established with different purposes belonging to the

same group and bank deposits with different purposes belonging to the same group.

g. No more than 10% of the Fund’s Net Asset Value shall be invested in a single class of securities issued

by any single issuer, with the exception of the following:

58

i. Debt instruments issued by the Government of the Kingdom or by a sovereign issuer, provided

that the value of such instruments does not exceed 35% of the Fund’s Net Asset Value; in

accordance with the Investment Funds Regulations;

ii. Listed debt instruments, provided that such instruments do not exceed 20% of the Fund’s Net

Asset Value;

iii. With regard to the public Fund aiming to invest in shares listed on Tadawul or any other regulated

stock exchange, investing more than 10% of the Fund’s Net Asset Value in shares of a single

issuer listed on Tadawul or any other regulated stock exchange, provided that such investment

amount does not exceed the percentage ratio value of the issuance in relation to the total market

value of all listed shares in the relevant market;

iv. Investing more than 10% of the Fund’s Net Asset Value in shares listed on Tadawul or any other

regulated stock exchange of a single issuer of a sector in which the Fund aims to invest, provided

that such investment amount does not exceed the percentage ratio value of the issuance in relation

to the total market value of such relevant sector

h. No more than 10% of the Fund’s Net Asset Value may be invested in derivatives.

i. No more than 10% of the Fund’s Net Asset Value may be invested in illiquid Assets.

j. The Fund shall not invest in derivatives other than instruments related to Shariah compliant rights

issue

k. The portfolio of the Fund may not include any security where a call is to be made for any sum unpaid

on that security unless it is feasible to pay the entire amount of cash or securities that can be converted

into cash from the portfolio of the Fund within (5) business days.

d. Securities Markets in which the Fund Invests

The Fund shall invest in shares of companies listed on any Gulf stock exchange (including main markets,

any parallel markets and any other market that may be introduced by competent authorities in the future on

which public equity securities are listed/traded) or shares and/or depository receipts of Gulf companies

and/or their subsidiaries/affiliates listed on any other stock market in the world. For more information,

please refer to Clause (ii) (b).

e. Fund Manager's Investment Decisions

The Fund Manager’s investment decision-making process combines top-down and bottom-up approaches.

Using top-down approach, portfolio management team analyses local fundamental economic indicators,

59

current and expected interest rates locally, dynamics of local sectors/industries along with other geo-

political factors. The team also analyses market related factors like historical and expected liquidity,

volatility, etc. Bottom-up approach involving fundamental research (that includes constructing financial

models and detailed financial forecasts) is used to select investment opportunities and construct the Fund’s

portfolio. Portfolio management team of the Fund Manager performs a regular assessment of investment

opportunities to ensure portfolio allocations are in line with long term return objectives of the Fund.

The Fund Manager’s team uses an Active Investment Strategy to identify Investments expected to achieve

returns in the long term through various research studies of companies and basic research studies of related

parties, in order to regularly assess the conditions of the market and relevant companies in order to manage

the Fund with increasing effectiveness.

f. Securities that Cannot be Invested in

i. The Fund shall not invest in any securities other than those mentioned above.

ii. The Fund shall not invest in any securities which do not comply with the Shariah

Investment Guidelines stipulated in Annex 1 of Terms and Conditions.

iii. The Fund shall follow investment limitations stipulated in Clause 41 of Investment Funds

Regulations.

g. Other Restrictions on Securities or Assets Which the Fund can Invest in

There are no other restrictions on the securities or assets that the Fund can invest in. However, the Fund

Manager may apply the necessary restrictions in the future as necessary, through amending the Fund’s

Terms and Conditions and Memorandum of Information.

h. Investment Minimum Limit in Units of the Fund or Other Funds Managed by the Fund

Manager or other Fund Managers

As set out in Clause (ii) (b).

i. Borrowing Rights

The Fund may obtain financing compliant with Shariah Investment Guidelines to invest in Target

Securities provided that such loans do not exceed 10% of the Fund’s Net Asset Value and for a maximum

60

tenure of one year. However, the Fund may borrow from the Fund Manager, any of its affiliates or other

banking entities (that are appropriately licensed by competent central banks in relevant jurisdictions) to

cover redemption requests and such borrowing shall be subject to 10% limit, as mentioned and allowed

under Article 64 of Investment Funds Regulations.

j. Maximum Limit of Dealing with a Counterpart

As set out in Clause (ii) (b).

k. Fund Manager's Risk Management Policy

The Fund Manager shall follow a risk management policy aimed at identifying and assessing potential

risks and disclosing the same as soon as possible to the Fund Board in order to take appropriate actions to

minimize their impact.

l. Indicative Index

i. Neither past performance of the Fund nor past performance of the Index is an indication of how the

Fund or relevant market(s) will perform in the future.

ii. There is no guarantee to Unitholders that the Fund’s absolute performance or its performance

relative to the Index will repeat or match past performance.

m. Exemptions Approved by the Capital Market Authority Regarding Restrictions on and

Limits of Investment

Not applicable as the Fund Manager has not requested any exemptions related to the Fund.

26. KEY RISKS OF INVESTING IN THE FUND

An investment in the Fund requires a commitment as stipulated in this Information Memorandum without

any guarantee of making a return on the invested capital. The Fund may be unable to achieve positive

returns from its Investments. The Fund’s Assets may probably be unsaleable or may not otherwise be

disposed of in return for a price deemed to be fair value by the Fund. Accordingly, the Fund may fail to

achieve any returns from such Assets.

61

a. Stock Market Risks

The major risk of the Fund is volatility of share prices which may lead to significant fluctuations in the

Fund’s Investment prices. An increase in share returns in the long term is linked to higher fluctuation.

Therefore, Unitholders must be prepared to bear the risk of losing all or part of their invested capital and

accept that achieving return on the same is not guaranteed. There is no guarantee that an Investment shall

achieve positive returns or any returns at all. The Fund Manager may be unable to sell the Investments for

prices deemed fair by the Fund Manager or may be unable to sell them at the time it desires and so the

Fund may fail to achieve any returns at all.

b. Past Performance of the Fund

Neither past performance of the Fund nor past performance of the Index is an indication of the Fund’s

performance in the future.

c. Fund Performance Guarantee

There is no guarantee to Unitholders that the Fund’s absolute performance or its performance relative to

the Index will repeat or match past performance.

d. Investment in the Fund is not a Bank Deposit

Investment in the Fund shall not be considered a deposit with a local bank that promotes or sells securities

or a deposit with any bank affiliated to the Fund.

e. Warning Statement about Potential Risks Associated with Investing in the Fund

There are several potential risks associated with investing in the Fund as shown in the list below.

f. List of Potential Risks of Investing in the Fund

(1) Political Change Risks

The Fund may be indirectly influenced by political developments in neighboring regions since such issues

may affect all economic and developmental activity.

(2) Economic Conditions Risks

62

The performance of the Fund may be affected by changes in economic conditions, and the Fund Manager

makes no representation that the Fund’s investment strategies will achieve its investment objectives.

(3) Shariah Compliance Risks

The Fund shall invest only in Shariah compliant companies and, as a result, may exclude some companies

with a potential for high expected return in case they do not conform to Shariah a rules. If an underlying

Investment comes in conflict with Shariah restrictions, the Fund Manager shall liquidate such Investment

before realizing its objectives and this may negatively affect the price of the Unit.

(4) Foreign Currency Risks

Fluctuations in currency exchange rates of underlying securities in a portfolio may cause the value of Units

to increase or decrease, as the case may be.

(5) Liquidity Risks

The Fund Manager is entitled, according to the Investment Funds Regulations, to limit the maximum

redeemable amount on each dealing day to 10% of the Fund’s net assets. Accordingly, the Investor’s

redemption request may not be executed in full. In addition, the Fund’s Assets may be unsalable or may

not be otherwise disposed of at the rate which the Fund Manager deems to be the fair value. Consequently,

the Fund may be unable to achieve any returns from such Assets at all.

(6) Initial Offering Risks

The Fund primarily invests in the shares of public companies that are publicly offered through initial

public offerings in primary markets. Investment in Initial Offerings may involve risks of limited shares that

may be subscribed to during the initial public offering period. The Investor’s knowledge of the company

issuing the shares may be insufficient or the company may have limited performance history. In addition,

the company issuing securities may belong to new economic sectors and some of them may still be in

development stages and do not achieve operational income in the short term, which is something that may

63

increase the risk of subscribing to shares, and this may have a negative effect on the performance of the

Fund and consequently lead to a decrease in the Unit price in the Fund.

(7) Risks of Making Investment in other Funds

Other funds in which the Fund aims to invest may be subject to the same risks mentioned in the “Key

Risks” section of this Information Memorandum and this may negatively affect the Fund’s investments

and the price of the Unit.

(8) Risks of Making Investment in Unrated Money Market Instruments

There are securities that are not rated by rating agencies. They are not known for high liquidity compared

to rated instruments, and this may expose the Fund to the risk of losing invested amounts. These factors

may have a negative impact on the Fund’s performance and the Unit price.

(9) Risks of Making Investment in other Markets

In addition to the risks mentioned hereinabove, investment in other markets may involve certain risks, such

as the risk of changes in financial regulations and currency markets, and political and economic changes

which may negatively affect the performance of the Fund and the Unit price. The underlying Investments

may become non-liquid, suspended or be removed. In such cases, Investors may be unable to realize their

invested capital.

(10) Non-Existence of Suitable Investments

There is no guarantee that the Fund Manager shall find investments that meet the Fund’s investment

objectives. Identifying suitable investments involves a great deal of uncertainty which in turn is reflected

on the Fund Manager’s inability to identify investment objectives and the Fund’s ability to achieve the

desired returns.

(11) Risks of Reliance on Key Personnel

64

The Fund’s success heavily depends on the success of its management team. Losing any of the

management team members in general (whether by way of resignation or otherwise) or its inability to

attract new employees or retain them may have a substantial impact on the Fund’s activity.

(12) Credit Risks

Credit risks relate to making investments in Murabaha instruments in relation to which it is possible that a

debtor defaults on its contractual obligations with third parties. This may result in losing the investment

amount or part thereof or delay the redemption thereof.

(13) Reduction in Credit Rating Risks

In case credit rating of any of the Sukuk in which the Fund invests is reduced, the Fund Manager may be

forced to dispose of such Sukuk, and this may in turn affect the Fund’s performance negatively.

(14) Risks of Making Investment in Rights Issues

The Fund Manager’s failure to exercise its right to purchase rights issue by portfolio companies may cause

the Fund’s investment market value in such companies to decrease, thus negatively affecting the Fund’s

performance.

(15) Conflict of Interest Risks

The Fund Manager shall be in charge of managing the Fund’s affairs in good faith in order to achieve the

best interests for Unitholders. It shall act in good faith and maintain integrity in its management of the

Fund. However, managers, officials and employees affiliated to the Fund Manager and its subsidiaries may

be involved in transactions and activities on behalf of other funds/ clients whose interests may be in

conflict with the Fund’s interests. The Fund Manager may have influence over transactions in which the

Fund Manager is materially interested or in which it has direct or indirect relationship with a third party in

a way that constitutes a conflict with the Fund Manager’s duties towards Unitholders. The Fund Manager

shall not be liable to Unitholders for any profits, commissions or compensation in relation to or as a result

of such transactions or any relevant transactions.

65

(16) Fund Management Risks

Unitholders shall not take part in managing the Fund and shall not receive the detailed financial

information accessible to the Fund Manager. Therefore, no person shall purchase Units unless they have

the intention to authorize the Fund Manager to undertake all aspects of Fund management.

(17) Risks of Legal and Regulatory Changes

The information mentioned herein is based on existing and published legislation. Amendments may be

introduced to the regulations in the Kingdom, including those related to taxes or zakat during the tenure of

the Fund, which may affect the Fund and its investments or Investors. The Fund shall have limited legal

recourse in case of dispute and it may resort to judicial authorities in the Kingdom to settle any dispute that

may arise. As government departments in the Kingdom are entitled to put the existing legislations into

action, any changes that may be introduced to such legislations or the failure of government departments in

application thereof may affect the Fund.

(18) Financing Risks

Financing may be sought for the Fund and / or any of its Investments and this could have a negative effect

on the returns of the Fund. Financing may increase the net income of the Fund, but it also involves a high

degree of financial risks and may pose various risks to the Fund and its Investments, such as an increase in

financing costs, economic decline, and deterioration of investment guarantees. The Fund’s Assets may be

mortgaged to a certain lender who may in turn claim such assets held under its possession as security for

the debt in case the Fund defaults according to the conditions common in this type of financing.

(19) Technical Risks

The Fund Manager depends on the use of technology in managing the Fund. However, its information

systems may be hacked or be attacked by viruses or suffer from partial or complete shutdown, which

consequently leads to minimizing the Fund Manager’s ability to manage the Investments of the Fund

66

effectively. This would negatively affect the performance of the Fund and in turn affect Unitholders in the

Fund.

(20) Risks of Natural Disasters

Natural disasters affect the performance of all economic and investment sectors which may have a

negative impact on the performance of the Fund beyond the Fund Manager’s control, such as earthquakes,

volcanoes, harsh weather changes, etc, which may negatively affect the Fund’s investments and

Unitholders in the Fund.

Based on all the above, the Fund’s Unit price may fall, and the Investor may be unable upon redemption to

receive the full amount of their Investment.

Each Investor shall bear the responsibility for any financial loss that may be incurred as a result of

investing in the Fund and which may be caused by any of risks mentioned hereinabove or other risks,

without any guarantee from the Fund Manager whatsoever, except in case of negligence or misuse on part

of the Fund Manager in connection with its obligations as per the Information Memorandum and Terms

and Conditions.

27. GENERAL INFORMATION

a. Profile of Investors Most Suited to Invest in the Fund

Due to the level of risks related to investment in the Fund as set forth in Paragraph 3 above, investment

shall not be suitable for investors who are unable to experience high risks.

b. Distribution Policy

The Fund is an open-ended investment fund whose main investment objective is to make long term

proceeds for Unitholders, thus the achieved profits will be reinvested and not distributed to Unitholders.

Reinvestment of income will be reflected in the value and price of Units.

c. Past Performance of the Fund

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(1) Total Return for One Year, Three Years and Five Years

Out/Under Perf Benchmark Index Fund Performance

-5.15% 1.35% -3.80% Year 1

11.33% -3.98% 7.35% Year 3

46.51% 17.66% 64.17% Year 5

146.99% 51.66% 198.65% Since Inception

6.93% 4.04% 10.97% Annual Return

(2) Total Annual Return for Each of the Past 10 Years

Out/Under Perf Benchmark Index Fund Performance

146.99% 51.66% 198.65% Since Inception

-1.78% 61.32% 59.54% 7002

12.70% -55.42% -42.72% 7002

-0.02% 37.25% 37.23% 2009

4.07% 13.35% 17.42% 2010

-0.51% 2.46% 1.95% 2011

8.72% 12.44% 21.16% 2012

18.37% 28.76% 47.13% 2013

8.77% -4.83% 3.94% 2014

17.17% -14.98% 2.20% 2015

-2.23% 11.43% 9.20% 7002

-5.15% 1.35% -3.80% 7002

(3) Fund Performance Compared to the Index

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(4) Profit Distribution History over the Last Three Fiscal Years

Not applicable as the Fund shall not distribute profits.

*Reports of the Fund are available for everyone on the Fund Manager's website.

d. Unitholders’ Rights

Units grant their holders no voting rights with respect to the Fund other than matters presented to them in

Unitholder meetings as outlined in Clause 13 of Terms and Conditions.

e. Unitholders’ Liability

Unitholders shall not be liable for the debts and obligations of the Fund and their liability shall only be

limited to the loss of their Investments in the Fund.

f. Termination of the Fund

The Fund Manager shall seek the consent of Unitholders by way of a Special Fund Resolution to terminate

the Fund. The Fund Manager shall give Unitholders and CMA at least twenty-one (21) days’ notice in

writing of the intention to terminate the Fund, without prejudicing the Fund’s Terms and Conditions and

Information Memorandum.

Notwithstanding the preceding paragraph, the Fund Manager shall terminate the Fund if the Net Asset

Value of the Fund is less than ten million Saudi Arabian Riyals (SAR 10,000,000) within six (6) months

from the date of notice issued by the Fund Manager to CMA informing it of the fact that the Fund Net

Asset Value is less than ten million Saudi Arabian Riyals (SAR 10,000,000).

40

100

160

220

280

340

400

Jun

-07

Fe

b-0

8

Oct-

08

Jun

-09

Fe

b-1

0

Oct-

10

Jun

-11

Fe

b-1

2

Oct-

12

Jun

-13

Fe

b-1

4

Oct-

14

Jun

-15

Fe

b-1

6

Oct-

16

Jun

-17

صندوق جدوى لألسهم السعودية

.198+ (أداء كلي)بي لألسهم السعودية الشرعي & مؤشر إس

+51.6

69

When the Net Asset Value of the Fund is less than ten million Saudi Arabian Riyals (SAR 10,000,000), the

Fund Manager will make a serious attempt to market the Fund to raise its Net Asset Value above ten

million Saudi Arabian Riyals (SAR 10,000,000) before the end of the six months. If the Fund Manager

fails to do so, it shall commence liquidation of the Fund upon its termination, without prejudice to Terms

and Conditions and Information Memorandum. The Fund Manager shall disclose on its website and that of

Tadawul, termination of the Fund and the timeline for liquidating it.

g. Risk Assessment

The Fund Manager acknowledges that there is an internal mechanism for assessing risks related to assets

of the Fund.

28. FEES, CHARGES AND EXPENSES

a. Payments Deducted from Fund’s Assets

i. Management Fee

In consideration for managing the Assets of the Fund, the Fund pays to the Fund Manager an annual

Management Fee (“Management Fee”) equal to the following:

1.25 % of the Fund’s Net Asset Value for each Class A Unit;

1.95 % of the Fund’s Net Asset Value for each Class B Unit;

0.98 % of the Fund’s Net Asset Value for each Class C Unit.

Management Fees shall be calculated and accrued on each Valuation Day based on the latest valuation of

the Net Asset Value. The Fund Manager shall deduct the Management Fee on a monthly basis.

ii. Custody Fee

a. The Fund Shall pay the Custodian an annual fee of 0.12% of the Fund’s Net Asset Value.

b. The Fund shall pay the Custodian a Transaction Fee of SAR 187.50 per Transaction (“Transaction Fee”).

iii. Auditor Fee

The Fund shall pay the Auditor an annual fee of no more than SAR 40,000 (“Audit Fee”).

iv. Administration Fee

The Fund shall pay the Administrator an annual fee of 0.08 % of the Fund’s Net Asset Value

(“Administration Fee”).

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v. Regulatory Fee

The Fund shall pay the regulatory bodies an annual fee of no more than SAR 7,500.

vi. Fund Board Remuneration

The Fund shall remunerate members of the Fund Board of Directors for travel expenses and other

reasonable expenses incurred with regard to their obligations towards the Fund, provided that such

remuneration shall not exceed 0.1% of the Fund’s Assets annually.

Remuneration of Fund’s independent board members for the services they rendered to the Fund is

estimated at no more than SAR 30,000 per annum.

vii. Publication Fee

In relation to the Fund’s annual report required for Unitholder reporting purposes, the Fund Manager shall

charge a publication fee of SAR 15,000 on each Valuation Day (“Publication Fee”). The Publication Fee

shall be deducted annually.

viii. Dealing Fee

The Fund shall bear all costs of transactions and brokerage commissions it incurs as a result of investment

purchase and sale. The total amount of such costs shall be disclosed in the audited annual and semi-annual

reports.

ix. Other Expenses

The Fund shall pay for all expenses and costs resulting from the Fund’s activities. The Fund shall pay for

any services related to any third party with regard to administration and operation services of the Fund

(such as but not limited to expenses of legal counsel) at the actual cost which is expected not to exceed

0.3% of the Fund’s Net Asset Value each year. The abovementioned expenses are an estimate only and

only actual expenses shall be deducted. Actual expenses shall be mentioned in the Fund’s annual report.

x. Taxes

VAT of 5% shall be deducted on fees and charges subject to VAT.

The Fund shall indemnify and hold the Fund Manager harmless along with the Fund’s Board members, managers,

employees, agents, advisors, affiliate companies and workers, against all claims, liabilities, costs, expenses,

including judgments, legal fees, and amounts paid for defense and settlement which they may incur as a result of

71

the activities they exercise on the Fund’s behalf as long as the Fund Manager undertakes its duty in good faith and

works in a way believed to be in the Fund’s best interest and as long as it is not accused of gross negligence or

fraud.

b. Table of Fees and Expenses, Method of Calculation and Time of Payment

Amount Time of

Payment

Method of

Calculation

Fees and

Expenses

1.25 % of the Fund’s Net Asset Value for each Class

A Unit;


B Unit;


C Unit

Annual Actual

Management

Fee

No more than SAR 30,000 Annual Actual

Fund Board

No more than SAR 40,000 Annual Actual Auditor Fee

0.12% of the Fund’s Net Asset Value Annual Actual Custody Fees

0.08 % of the Fund’s Net Asset Value Annual

Actual Administration

Fee

SAR 7,500 Annual Actual Regulatory Fee

SAR 15,000 Annual

Actual Publication

Fee

SAR 187.50 per Transaction Annual Actual Dealing Fee

No more than 0.30% of the Fund’s Net Asset Value Annual

Actual Other

Expenses

c. Details of Charges Imposed in connection with Subscription and Redemption Requests

i. Subscription Fee

A Subscription Fee of no more than 3% of the Subscription Amount is charged on each initial or

subsequent subscription by the Investor in the Fund’s Units (“Subscription Fee”). Subscription Fee

is deducted at the time the subscription monies are received and shall be paid to the Fund Manager.

72

For the avoidance of doubt, the Fund Manager shall be entitled to waive any subscription fee as it

deems necessary.

ii. Early Redemption Fee

Early Redemption Fees of 1% of the redeemed amount shall be payable by Unitholder to the Fund

Manager (“Redemption Fee”). If Unitholder redeems Units within thirty (30) days as of the date of

purchasing the same, Redemption Fees shall be imposed in order to indemnify the Fund against the

expenses it incurs as a result of early redemption. Such fee shall be calculated on redeemed Units

based on a ‘first in, first out” basis.

d. An Example Showing All Fees and Expenses Paid from Fund's Assets or from Unitholders

The below table shows an example of investment of a Unitholder assuming that the value of Fund's

Assets is SAR 10,000,000 unchanged throughout the year and the Investor's Subscription Amount is

SAR 100,000 unchanged throughout the year, assuming that the Fund achieves an annual return of

10% on investment.

Table Showing an Example of Unitholder’s Investment, Units and Share in Expenses in SAR

Amount to be

Borne by

Unitholder for

Its Investment

in the Fund for

a Year

Amount to be

Paid by

Unitholder

Fees

Applicable

to All

Fund’s

Assets

Fees

Applicable to

Unitholder

Fees

3,000 3.00% Subscription Fee

1,000 1.00% Early Redemption Fee

1,250 1.25% Class A Management

Fees

1,950 1.95% Class B Management

Fees

73

980 0.98% Class C Management

Fees

120 0.12% Custodian fee

80 0.08% Administration Fee

300 30,000 Remuneration of

Independent Board

Members

400 40,000 Auditor Fee

150 15,000 Publication Fee

75 7,500 Regulatory Fee

300 0.30% Other Expenses

Total Amount to Be Borne by Unitholder (If investment period is one year)

5,675 Class A

6,735 Class B

5,735 Class C

Net Value of Investment for a Year

104,325 Class A

103,625 Class B

104,595 Class C

* Note: Subscription Fee shall be paid only once upon Subscription

29. VALUATION AND PRICING

a. A Description of Valuation Method and Basis of Underlying Assets

For the purposes of determining the value of the Fund’s assets, Investments in Target Securities that

are listed/traded on an exchange shall be valued at the closing prices as of the valuation day on the

relevant exchange. In case such securities are not traded on the valuation day, the last available official

closing price of the securities on the relevant exchange shall be used. Profits or dividends receivable

shall be accrued up to the Valuation Day. Target Securities purchased through a book building process

shall be valued at cost starting from the date on which the Fund Manager subscribes to the securities

74

till the date such securities commence trading on an exchange. Target Securities allocated via a

corporate action shall be valued at their intrinsic value as of the ex-right date to the date the securities

commence trading on an exchange. Specifically, where a security is a unit of another fund, such

securities shall be valued based on the last unit price declared by such funds up to the effective

valuation date. Direct investments in money market instruments that do not trade on an exchange shall

be valued based on cost plus profit accrued up to the Valuation Day. Cash shall be added to the Fund's

Assets to reach the total value of the Fund's Assets.

b. Frequency of Valuation and Number of Valuation Points

The Fund’s Unit price shall be calculated on each Business Day.

c. Actions to be Taken In case of Misevaluation or Mispricing

In case the Fund Manager becomes aware of any misevaluation or mispricing in relation to the Fund’s

Assets, the Fund Manager shall use good faith efforts to re-evaluate the Fund’s Assets and make

corrections as necessary to rectify the price per Unit .Valuation and pricing of investments in

currencies other than Saudi Arabian Riyals will be referenced to closing prices as published by

Thomson Reuters, Bloomberg or other similar data providers as deemed appropriate by the Fund

Manager. For the avoidance of doubt, the Fund Manager shall immediately compensate all affected

Unitholders, including ex-Unitholders, for all misevaluations or mispricing.

d. Description of Method for Calculating Unit Price

The price per Unit shall be calculated by deducting the Fund’s total liabilities from the value of total

Assets and dividing the value by the number of Units existing on Valuation Day.

e. Method of Announcing the Unit Price

The Fund Manager shall announce the Unit Price on a daily basis.

30. DEALINGS

a. Initial Offering, Commencement Date, Term and Initial Price

Not applicable as the Fund was previously offered on (June 30, 2007 G) (Jumada al-Thani 15, 1428

H).

75

b. Deadline for Receiving Subscription Forms and Redemption Requests on a dealing day.

The application submission deadline shall be before 10 am (Riyadh local time) on Valuation Day.

Subscription Date and Redemption Date shall depend on the date on which completed applications are

submitted.

c. Procedures for Submitting Instructions to Subscribe in, or Redeem Units

Subscription Process

In case any Investor wishes to purchase Units in the Fund, it shall do so by completing and delivering

to the Fund Manager the following documents:

a. Account Opening Agreement, completed, approved/ signed (unless the Investor is an existing

client of the Fund Manager);

b. Completed, approved / signed Terms and Conditions (unless the Investor is an existing client of the

Fund Manager); and

c. Completed, approved/ signed Subscription Form.

Investors wishing to purchase Units in the Fund shall deliver the abovementioned documents to the

Fund Manager by mail, courier or by hand, or via authorized electronic media.

The subscription application shall be deemed completed when the Fund Manager receives the

abovementioned required documents, in addition to the Subscription Amounts in the specified

accounts numbers of the Fund Manager. After subscription, Unitholders shall have a confirmation of

their Unit holding by the Fund Manager including the subscription details.

Each Subscription Date shall depend on the date of receiving the completed subscription application.

In case the completed subscription application is received on or before the deadline for receiving the

applications, the Subscription Date shall be the same Business Day on which the application is

received. In case the completed subscription application is received after the deadline for receiving the

applications, the Subscription Date shall be the following Business Day.

The Fund Manager may, based on Anti-Money Laundering and ‘Know Your Customer’ reports or any

instructions from any governmental regulatory bodies reject subscription applications. In addition, the

Fund Manager may reject any subscription application if such subscription, in its opinion, may result

in a violation of any CMA regulations. In such case, the Subscription Amount shall be refunded

without any fees or deductions within a period of five (5) Business Days from the date of rejection.

The Fund Manager shall have the right to share information pertaining to Investors with the Custodian

76

for the purposes of satisfying internal audit requirements and Anti-Money Laundering and Counter-

Terrorism requirements.

Redemption Process

Unitholders can request redemption of a part or all of their Units by completing and signing a

Redemption Form and delivering to the Fund Manager the completed form by mail, by courier or

hand, or via authorized electronic media.

Each Redemption Date shall depend on the date of receiving the completed Redemption Request. In

case the completed Redemption Request is received on or before the deadline for receiving the

applications, the Redemption Date shall be the same Business Day on which the application is

received. In case the completed Redemption Request is received after the deadline for receiving the

applications, the Redemption Date shall be the following Business Day. In either case, Unitholders

shall have a confirmation by the Fund Manager including the redemption details.

Based on written instructions to a Unitholder, the Fund shall be entitled to compulsorily redeem all

Units owned by a Unitholder at the applicable redemption price (which will represent the Fund’s Net

Asset Value) if the Fund Manager decides that such action is in the interest of the Fund. Also, the Fund

Manager shall be entitled to compulsory redeem Units in the Fund in any of the following cases:

i. If, in the Fund Manager’s opinion, the continuing ownership of Units by the Investor is

detrimental to the Fund from a financial, tax, legal or regulatory perspective, or in conflict with

these Terms and Conditions and Subscription Agreement; or

ii. If any of the declarations submitted by the Unitholder in their Subscription Agreement are

incorrect or have become invalid.

d. Unitholders Register

The Fund Manager shall maintain a register of Unitholders in the Kingdom and such register shall be

conclusive evidence of ownership Units registered therein.

e. Investment of Subscription Amounts in Cash Instruments Funds

Subscription Amounts may be invested in Cash Instruments Funds with a party regulated by the

Capital Market Authority or a similar regulatory body outside the Kingdom until the minimum amount

77

is reached in accordance with this Information Memorandum and the Terms and Conditions of the

Fund.

f. Minimum Subscription Amount

There shall be no minimum Subscription Amount to be collected from Investors before the Fund’s

operations start.

g. Corrective Actions Necessary to Ensure That the Requirement of SR 10,000,000 or Its

Equivalent is Met as a Minimum of the Fund’s Net Asset Value

When the Net Asset Value of the Fund is less than ten million Saudi Arabian Riyals (SAR

10,000,000), the Fund Manager shall make the necessary changes to the balance of the Fund's

investment portfolio in accordance with the limits of Fund's investments, Information Memorandum

and Terms and Conditions. In addition, the Fund Manager may receive additional subscriptions to the

Fund and obtain funding to enable the Fund to make additional investments.

h. Deferring or Suspending Dealing in Units

The Fund Manager shall suspend subscription and redemption in Fund Units if CMA orders such

suspension. The Fund Manager may suspend subscription and redemption in Fund Units pursuant to

Terms and Conditions of the Fund.

i. The Fund Manager's Authority to Defer or Suspend Subscription or Redemption

Requests

The Fund Manager may, at its absolute discretion, defer any redemption request if the

transaction in the primary market in which the securities or other assets owned by the

Fund are traded, either in general or in respect of the assets of the Fund which the Fund

Manager reasonably believes is material of the Net Asset Value of the Fund.

j. Choosing Redemption Requests to be Deferred

If redemption requests exceed 10% of the Fund’s Assets or if they would reduce the Net Asset Value

of the Fund to less than ten million Saudi Arabian Riyals (SAR 10,000,000), they shall be deferred.

31. Unit Characteristics

The Fund Manager may issue an unlimited number of Units in the Fund, all of same class, pursuant to

Information Memorandum and Terms and Conditions. Each Unit represents an equal common interest in

78

the Fund. Units may be redeemed only from the Fund Manager and are not transferable from one class to

another. The Fund Manager may not terminate any class.

Units are divided into the following three classes:

a. Class A Units: These Units are issued to Investors pursuant to Information Memorandum with an

investment value of no less than SAR 25,000,000.

b. Class B Units: These Units are issued to Investors pursuant to Information Memorandum with an

investment value of no less than SAR 1000.

c. Class C Units: These Units are issued to managers, senior executives and employees of the Fund

Manager. These Units can only be issued at the Fund Manager’s discretion in return for a Minimum

Subscription Amount of SAR 1000.

The Fund Manager shall not issue ownership certificates for Units in the Fund, but the Fund Manager shall

maintain a register of all Unitholders. Following every transaction carried out by an Investor, such Investor

shall receive a confirmation in writing containing full details of the transaction. If and when the Fund is

liquidated, all Investor’s Units shall be entitled to a proportionate share in the Net Asset Value of the Fund

made available for distribution to Unitholders; meaning that Unitholders’ rights in the Fund’s net assets

shall be equal.

32. ACCOUNTING AND FINANCIAL REPORTING

a. The Fund Manager shall prepare annual reports that include the Fund’s audited financial statements, short-

form annual reports and interim reports in accordance with the requirements set forth in the Investment

Funds Regulations.

b. Interim reports shall be prepared and made available to the public within (35) Business Days from the end

of the period to which the report relates, on the Fund Manager’s website and on the website of Tadawul.

c. The Fund Manager shall provide each Unitholder with details of the Net Asset Value of the Units owned

by it and the record of transactions in Fund Units made by it within (15) Business Days of each transaction

in Units of the Fund by the relevant Unitholder.

d. The Fund Manager shall send to Unitholders (including former unitholders during the year when such

statement was prepared) an annual statement summarizing their transactions in Units in the Fund during

the course of a financial year within (30) Business Days as of the end of the financial year. Such statement

79

shall include the outline of service fees, expenses, and charges discounted from the Unitholder, as

specified in these Terms and Conditions, in addition to details of all the violations of investments

limitations described in the Investment Funds Regulations and these Terms and Conditions.

e. The Fund Manager shall, at the end of each quarter, disclose information about the Fund on its website or

that of Tadawul. The information shall include, at least, the followings:

i. List of issuers which securities constitute the largest ten Investments by the Fund and their percentages as

on the first day of the quarter;

ii. Percentage of total fees and charges of the relevant quarter to the average of the Fund’s Net Asset Value;

iii. Amount and percentage of profits distributed during the quarter in question, if any;

iv. Value of the Fund Manager’s investments and percentage of the Net Asset Value as at the end of the

relevant quarter;

v. Amount and percentage of the relevant quarter’s dealing expenses to the Fund’s average Net Asset Value;

vi. Standards and index to measures the risks;

vii. Fund’s performance standards and index; and

viii. Percentage of leverage to the Fund’s Net Assets Value at the end of the relevant quarter;

Annual audited financial statements shall be made available to Unitholders free of charge upon request

33. FUND BOARD

The Fund Manager has appointed a Fund Board consisting of the following members:

a. Names of Fund Board Members

i. Dr. Fahad Al Turki – Chairman

Dr. Al Turki is a Senior Economist and Head of Research Department at Jadwa Investment

Company. Mr. Al Turki joined Jadwa Investment Company in 2012. Mr. Al Turki carries

80

out substantial research on Saudi Arabian and regional affairs. Before joining Jadwa

Investment Company, Dr. Al Turki led the Macroeconomics Research Unit at Barclays Bank

KSA where he was in charge of similar duties. Doctor Al Turki has a track record in the

field of Economics during his previous job at the Saudi Arabian Monetary Agency and

International Monetary Fund. Mr. Al Turki received his B.Sc. in Financial Administration

from King Saud University and his M.Sc. degree in Economics from Oregon State

University, USA. Mr. Al Turki is also holder of a Ph.D. degree in Economic Philosophy

from the Oregon State University.

ii. Dr. Mohammed Sultan Alsehaly – Independent Member

Dr. Alsehaly is the Head of the Department of Accounting at King Saud University, a

member of the Zakat & Tax First Instance Committee and a director at the Saudi Accounting

Association. Dr. Alsehaly has authored and published several research papers and holds a

Ph.D. in Accounting from Melbourne University, Australia, in addition to an MS.c. in

Accounting from St. Louis University, USA and B.Sc. in Accounting from King Saud

University.

iii. Dr. Waleed Addas – Independent Member

Dr. Addas holds the position of Acting Director of Operation Resources Management for

Development Effectiveness at the Islamic Development Bank in Jeddah. Dr. Addas’

previous positions include Head of the Programs and Portfolio Monitoring Department at the

same bank and as Financial and Administrative Director at the International Energy Forum

(IEF) in Riyadh. Dr. Addas holds a Ph.D. in Economics from the International Islamic

University Malaysia, a MS.c. in Economics from Essex University and BS.c. in Economics

from Middlesex University, UK.

iv. Mr. Ghannam Al Ghannam – Member

Mr. Ghannam Al Ghannam holds the position of Director of Retail and Corporate

Investment Department at Jadwa Investment Company. Before joining Jadwa Investment

Company, Mr. Al Ghannam worked as senior advisor of individual customer investments at

HSBC Saudi Arabia. Mr. Al Ghannam has experience in business development and wealth

management and follows distinct methodology in all sales and services, operations,

operational processes and risks management. He took part in organizing campaigns to

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collect funds for different investment companies in private equity, asset management and

real estate products. Mr. Al Ghannam is also a certified planning officer holding a MS.c.

degree in Informatics from Ohio State University, USA, in addition to a BS.c. degree in

Business Administration from Toledo University, Ohio, USA.

v. Anas Al Sheikh – Member

Mr. Anas Al Sheikh is the General Legal Adviser and Head of Compliance at Jadwa

Investment Company. Before joining Jadwa Investment Company, Mr. Anas Al Sheikh was

the Director General of Policy and Procedures at Tadawul, the only authorized entity acting

as a securities market in the Kingdom of Saudi Arabia, where securities are listed and

traded. Previously, Mr. Anas served as an advisor at Clifford Chance, Saudi Arabia. During

his tenure, Anas provided legal advice to several companies in the securities and investment

field. At the beginning of his career, Anas spent eight years with the Capital Market

Authority, where he held various positions till he became Director of the Department of

International Regulations, Rules and Standards. During his work with the Authority, Anas

contributed to the establishment of the legal and legislative structure of laws and regulations

in force at the Authority.

Anas Al-Sheikh holds a MS.c. degree in Corporate Law from Nottingham University and a

BS.c. in Laws from King Saud University.

b. Roles and Responsibilities of the Fund Board

The responsibility of the Fund Board shall include the following:

i. Approving material contracts, decisions and reports involving the Fund, including, but

not limited to, contracts for the provision of Fund management services, contracts for

the provision of custody services, excluding contracts entered into pursuant to

investment decisions regarding underlying investments made or to be made by the

Fund;

ii. Approving a written policy with regard to voting rights related to the Fund’s Assets;

iii. Overseeing and, where appropriate, approving or ratifying any conflicts of interest

which the Fund Manager has disclosed;

iv. Meeting at least twice annually with the Fund Manager’s compliance committee or its

compliance officer to review the Fund Manager’s compliance with all applicable rules,

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laws and regulations, including (without limitation) the requirements of the Investment

Funds Regulations;

v. Ensuring the completeness and accuracy of the Terms and Conditions, the Information

Memorandum and any other document, contractual or otherwise, that includes

disclosures relating to the Fund and the Fund Manager and its management of the Fund

and ensuring compliance with the Investment Funds Regulations;

vi. Ensuring that the Fund Manager carries out its obligations in the best interests of

Unitholders, in accordance with the Investment Funds Regulations, the Terms and

Conditions and the Information Memorandum;

vii. Demonstrating a fiduciary duty to Unitholders, including a duty to act in good faith, a

duty to act in the best interests of Unitholders and a duty to exercise all reasonable care

and skill; and

viii. Taking minutes of meetings that provide all deliberations and facts of the meetings and

the decisions taken by the Fund Board.

c. Details of Remuneration of Fund Board Members

The Fund shall remunerate members of the Fund Board for travel expenses and other

reasonable expenses incurred with regard to their obligations towards the Fund and such

remuneration shall not exceed 0.1% of assets of the Fund per annum. Remuneration of

Fund’s independent board members for the services they render to the Fund is estimated to

be no more than SAR 30,000 per annum.

d. Disclosure of Any Current/Possible Conflict of Interest between Board Members and

the Fund

The Fund Board shall supervise and resolve any conflict of interest. As of the date of this

document, the Board is composed of members appointed by the Fund Manager. Members of

the Board shall act in good faith in the best interests of Investors in the Fund under the

Investment Funds Regulations, in addition to making the utmost effort to resolve conflicts of

interest in good faith, as they deem appropriate.

e. Fund Boards Which Board Members Take Part in Their Management

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Currently, Board members do not manage any investment fund in the Kingdom of Saudi

Arabia except for the following:

1. Jadwa Global Sukuk Fund (managed by all the above-mentioned members)

2. Jadwa Arab Markets Equity Fund (managed by all the above-mentioned members)

3. Jadwa GCC Equity Fund (managed by all the above-mentioned members)

4. Jadwa SAR Murabaha Fund (managed by all the above-mentioned members)

5. Jadwa REIT Al-Haramain Fund (Dr. Fahad Al Turki and Mr. Ghannam Al Ghannam

(members))

6. Jadwa REIT Saudi Fund (Dr. Fahad Al Turki and Mr. Ghannam Al Ghannam (members))

34. SHARIAH A BOARD

The Fund is a Shariah compliant fund, subject to the supervision of the Shariah Board of Jadwa

Investment Company. The Shariah Board consists of the following members:

a. Shariah Board Members

i. Sheikh Dr. Abdullah Al-Mutlaq (Chairman)

Dr. Al-Mutlaq is a member of the Council of Senior Scholars in the Kingdom. He is also the

former Head of the Comparative Fiqh Department at Imam Muhammad Bin Saud Islamic

University and a member of the Shariah Board of many Islamic financial institutions. Dr. Al-

Mutlaq earned his Ph.D. in Comparative Fiqh and Financial Transactions from the Higher

Judicial Institute at Imam Muhammad Bin Saud Islamic University.

ii. Sheikh Dr. Mohammed Bin Ali Al Qari Bin Eid (Member)

Dr. Mohammed is a professor at King Abdul Aziz University, Islamic Economics Section in

Jeddah. Dr. Mohammed is an expert at the Fiqh Society at the Islamic Conference

Organization in Jeddah. Dr. Eid earned his PhD from the Islamic Economy and Financial

Markets Department at King Abdul Aziz University in Jeddah.

iii. Sheikh Badr Al Omar (Member)

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Mr. Al Omar is holder of a BS.c. degree in Sunnah Sciences from Imam Muhammad Bin

Saud Islamic University. He has extensive experience in Islamic Banking and, currently, he is

the Head of the Shariah Group at Jadwa Investment Company following his position at Al

Rajhi Bank. Mr. Al Omar is also a former member of the Islamic Banking Committee at the

Saudi Arabian Monetary Agency.

iv. Sheikh Ahmed Bin Abdulrahman Al Qayedi (Member)

Mr. Al Qayedi is Head of Shariah Research with experience in banking exceeding 13 years,

in investment banking. Mr. Al Qayedi authored various Shariah research papers and

previously worked as a Shariah advisor for Al Rajhi Bank and Al Jazira Bank. Mr. Al Qayedi

earned his MS.c. degree in Comparative Fiqh and Financial Transactions from the Higher

Judicial Institute at Imam Muhammad Bin Saud Islamic University.

b. Description of Roles and Responsibilities of the Shariah Board

The Shariah Board has determined the procedures to be followed for investment in securities.

The Shariah Board shall ensure the Fund Manager's compliance with such procedures

through the Shariah Supervisor at Jadwa Investment Company who directly reports to the

Shariah Board on a quarterly basis. The Fund Manager shall apply such procedures in the

management of the Fund. The Shariah Investment Guidelines show the Shariah guidelines

applied by the Fund.

c. Remuneration of the Shariah Board

The Fund shall bear no remuneration in consideration of the services provided by the Shariah

Board.

d. Details of Shariah Guidelines Applied

Shariah Guidelines are attached to Terms and Conditions of the Fund (Annex 1).

35. FUND MANAGER

a. Name of the Fund Manager

The Fund shall be managed by Jadwa Investment Company.

b. Fund Manager's License Number

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The Fund Manager is licensed by CMA under licence No. 06034-37 issued by CMA on

August 21, 2006.

c. Fund Manager's Registered Address


PO Box: 60677

Riyadh 11555


d. Date of Establishment

The Fund Manager was established on August, 21 2006 with paid up capital of SAR

500,000,000.

e. Summary of Financial Statement

No more than 3% of Subscription Amount Subscription Fee


A Unit;


B Unit;


C Unit

Management Fee

1% of Redemption Amount. Early Redemption Fee

shall apply on Units that are redeemed within 30

days of Purchase Date

Redemption Fee

No more than SAR 30,000 for independent members

only Fund Board

No more than SAR 40,000 per annum Auditor Fee

0.12% of the Fund’s Net Asset Value Custody Fees

0.08 % of the Fund’s Net Asset Value Administration Fee

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No more than SAR 7,500 per annum Regulatory Fee

SAR 15,000 per annum Publication Fee

SAR 187.50 per annum Dealing Fee

No more than 0.30% of the Fund’s Net Asset Value Other Expenses

f. Board of Fund Manager

i. Members

The Board of Directors of Jadwa Investment Company consists of the following members:

1. Mr. Adib Bin Abdullah Alzamil (Chairman)

Mr. Adib Alzamil is the Chairman of the Board of Directors of Jadwa Investment Company

and Fajr Capital. Concurrently, he is the Managing Director of Finance & Investment of

Zamil Group Holding Company since year 2000. Mr. Alzamil was formerly the Managing

Director of Zamil Industrial Investment Company from 1975 to 1998 and Zamil Air

Conditioners from 1975 to 1998.

Mr. Alzamil is a member of the Board of Directors of Zamil Group Holding Company,

Sanabil Company. Mr. Alzamil holds a BS.c. degree in Business Administration from

Portland State University, Oregon, USA.

2. Abdulaziz Bin Mohammed Al-Subeaei

Mr. Abdulaziz Alsubeaei is a founder and a Board Member Mohammed Alsubeaei & Sons

Investment Company (MASIC). He played a pivotal role in the creation of MASIC from

entire family business and completed its transition program.

Mr. Alsubeaei is a member of the Board of Directors of Jadwa Investment Company, Fajr

Capital and Gulf Farabi Petrochemical Company. He is the Chairman of Jabal Omer

Development Company. He is the Chairman of Compliance Committee of Jadwa Investment

Company and HR, Compensation & Nomination Committee of Fajr Capital.

Mr. Alsubeaei holds B.A. in Business Administration from King Saud University.

3. Dato’ Noorazman Abdul Aziz

Dato Noorazman is the Executive Director of Khazanah Nasional Berhad, the strategic

investment arm of the Government of Malaysia. He is also a board member at Fajr Capital.

During his career, he gained extensive knowledge in fields related to the financial and

87

banking sector including but not limited to financing, stock market and bond market of big

market companies and entities such as Citigroup, Islamic Bank of Malaysia & Kuala Lumpur

Stock Exchange. He is an active member of Institute of Islamic Finance Professionals.

He graduated from the University of Louisiana with a bachelor's degree in Finance.

4. Abdulrahman Bin Ibrahim Al-Ruwaita

Mr. Abdulrahman Alrowaita is the Managing Director & Board Member of Aseer Company

and Senior Vice President of Dallah Al Baraka Group. He is the Chairman of the Board of

Directors of Halwani Brothers Company. He is recently appointed as a member of the

Advisory Commission of the Saudi Supreme Economic Council.

Mr. Alrowaita is a member of the Board of Directors of Jadwa Investment Company, Saudi

Research & Marketing Group, Emaar The Economic City and Al Khozama Management

Company. He is the Chairman of Audit and Risk Committee of Jadwa Investment Company.

Mr. Alrowaita holds a MS.c. degree in Industrial Engineering.

5. Iqbal Ahmad Khan

Mr. Iqbal Khan is the Chief Executive Officer of Fajr Capital. He is also a member of the

Board of Directors of Jadwa Investment, Bank Islam Brunei Darussalam in Brunei, and the

MENA Infrastructure Fund in the UAE. Previously, he was the Founding CEO of HSBC

Amanah, the global Islamic financial services division of the HSBC Group. He is a long-time

advocate of the Islamic financial services industry, serving as an advisor to government

initiatives of UK, UAE, and Malaysia.

Mr. Khan holds a MS.c. degree in Political Science and International Relations and a B.Sc.

(Hons) in Physics and Chemistry, both from Aligarh Muslim University. He is the recipient

of The Royal Award of Islamic Finance 2012 by HM the King of Malaysia, and was

recognized for his “Outstanding Contribution to Islamic Finance” by Euromoney in 2006.

6. Howard Marks

Mr. Howard Marks is the Chairman of Oaktree Capital Management Company. He was the

Chief Investment Officer for Domestic Fixed Income at TCW. Mr. Marks worked at the

Citicorp Investment Management for 16 years, where from 1978 to 1985 he was Vice

President and Senior Portfolio Manager in-charge of convertible and high yield securities.

Between 1969 and 1978, he was an equity research analyst and subsequently, Citicorp’s

Director of Research.

88

Mr. Marks holds a B.S.Ec. Degree cum laude graduate from the Wharton School of the

University of Pennsylvania major in Finance and an M.B.A. in Accounting and Marketing

from the Graduate School of Business of the University of Chicago, where he received the

George Hay Brown Prize.

He is a CFA charter holder and a Chartered Investment Counselor.

7. Michael Powell

Mr. Michael John Powell is the Managing Partner and Co-Founder of Thematic Capital

Partners and Senior Partner of GCS Capital. He is a member of the Board of Directors of

Jadwa Investment, Fajr Capital and Exogenesis Corporation. He is a Senior Advisor to Moore

Capital, a USD20bn Hedge Fund.

Mr. Powell was formerly a Group General Manager & Global Head of Markets of HSBC and

a member of the HSBC Group Executive Committee. For 24 years of service at HSBC, he

started as a Derivatives Trader and promoted to different key positions that include being

Treasurer in Australia, Head of Markets in Hongkong, and Global Head of Markets in

Europe.

As an entrepreneur, Mr. Powell co-founded Hedgehogs, a social network site for finance,

currently being used by Reuters Plc as their web 2.0 initiative. Also, he co-founded TEN, a

sports networking company and Curverider, a software company. Mr. Powell is a FSA

registered and he holds MBA from Henley Business School.

8. Chris Masterson

Mr. Masterson is the chairman of Montagu Private Equity LLP in the United Kingdom.

Mr. Masterson is member of the board of directors of Jadwa Investment, Havenvest Private

Equity Middle East and Fajr Capital.

Mr. Masterson holds an MBA from Manchester University and a BS.c. degree in psychology

From London College University.

9. Tariq Al Sudairy

Mr. Tariq Al-Sudairy is the Managing Director & CEO of Jadwa Investment Company.

Prior to joining Jadwa, Mr. Al-Sudairy was a Senior Vice President at Amwal AlKhaleej, a

regional private equity firm headquartered in Riyadh, Saudi Arabia.

89

Previously, Mr. Al-Sudairy was a Manager with McKinsey & Company, based in UAE.

Earlier in his career, Mr. Al-Sudairy spent four years with Lexecon Inc., an economics

consulting firm in Boston, MA.

Mr. Al-Sudairy is a member on the Boards of Directors of Alhokair Group, Tadawul and

Saudi Aramco Base Oil Company – Luberef.

Mr. Al-Sudairy earned his MBA from Harvard Business School and holds a BS.c. degree

with honors in Economics from Williams University.

g. Fund Manager Responsibilities

- The Fund Manager shall act for the benefit of Unitholders in accordance with the

Investment Funds Regulations, the Authorized Persons Regulations and the Terms and

Conditions.

- The Fund Manager shall comply with all principles and duties required under the

Authorised Persons Regulations including the fiduciary duty towards Unitholders which

includes the duty to act in the best interests of Unitholders and duty to exercise all

reasonable care and skill.

- With respect to the Fund, the Fund Manager's responsibilities shall include:

a. Fund management;

b. Fund operations, including administrative services to the Fund;

c. Offering of Units; and

d. Ensuring the accuracy of the Terms and Conditions and the Information Memorandum

and verify that they are complete, clear, accurate, and not misleading.

h. Delegated Functions

Any delegation of the Fund Manager’s responsibilities and duties to any other person

pursuant to the Investment Funds Regulations shall not in any way limit, reduce or satisfy the

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Fund Manager’s responsibilities under the Investment Funds Regulations and the Authorized

Persons Regulations.

i. Other Business Activity of Fund Manager

The CMA granted the Fund Manager all licenses of dealing, managing, custody, arranging

and advising. These licenses allow the Fund Manager to operate as a full service Shariah a-

compliant investment bank in the Kingdom under the license number 06034-37.

j. Removal/Replacement of Fund Manager

The CMA shall have the power to remove the Fund Manager and take any action it deems appropriate

to appoint a replacement Fund Manager or to take any other measures it deems necessary in the event

of:

- The Fund Manager ceases to carry on management activities without notification to CMA under the

Authorized Persons Regulations;

- The cancellation by CMA of the Fund Manager’s relevant authorization(s) to carry out management

activities under the Authorised Persons Regulations;

- A request by the Fund Manager to the CMA to cancel its relevant authorization to carry out

management activities;

- The CMA believes that the Fund Manager has failed, in a manner which CMA considers material, to

comply with the Capital Market Law or its Implementing Regulations;

- Death, incapacity or resignation of a portfolio manager who manages Fund’s Assets, if no other

registered person employed by the Fund Manager can manage Fund’s Assets or assets of funds

managed by the portfolio manager;

- A Special Resolution by Unitholders owning 75% or more of Units requesting CMA to remove the

Fund Manager; or

- Any other event determined by CMA on reasonable grounds to be of sufficient material importance.

36. Custodian

a. Name of the Custodian

HSBC Saudi Arabia Ltd.

91

b. Custodian's License Number

The Custodian is licensed by the CMA under licence No. (05008-37) issued by the CMA.

c. Custodian's Registered Address

7267- Al Olaya Road - Al Murooj District.

Riyadh 12283-2255.


d. Date of Establishment

The Custodian was established on 27/06/1427 H with paid up capital of SAR 500,000,000.

e. Functions, Duties and Responsibilities of Custodian

The Custodian shall be responsible for keeping and protecting Fund’s Assets located in the Kingdom on

behalf of Unitholders and taking all administrative measures in relation to the custody of the Fund's Assets.

f. Delegated Functions

Any delegation of the Custodian’s responsibilities and duties to any other person pursuant to the

Investment Funds Regulations shall not in any way limit, reduce or satisfy the Custodian’s responsibilities

under the Investment Funds Regulations and the Authorized Persons Regulations.

g. Removal/Replacement of Custodian

The CMA shall have the power to remove the Custodian and take any other measures it deems necessary,

as appropriate, in the event of:

i. The Custodian ceases to carry on custody activity without notification to CMA under the Authorised

Persons Regulations;

ii. The cancellation or suspension by CMA of the Custodian’s relevant authorization to carry out custody

activity under the Authorised Persons Regulations;

iii. A request by the Custodian to CMA to cancel its authorization to carry out custody activity;

iv. The CMA believes that the Custodian has failed, in a manner which CMA considers material, to

comply with the Capital Market Law or its Implementing Regulations; or

v. Any other event determined by CMA – based on reasonable grounds - to be of sufficient material

importance.

92

In addition to the power of the CMA, the Fund Manager may remove the Custodian by a written notice

if it reasonably considers that removal of the Custodian shall be in the interest of Unitholders. The

Fund Manager shall immediately notify the CMA and Unitholders in writing.

37. Auditor

a. Name of the Auditor

The Fund Manager has appointed KPMG Al Fozan and Partners as Auditor of the Fund (the

“Auditor”).

b. Custodian's Registered Address

Saladin Road - KPMG Tower

PO Box: 92876

Riyadh 11663


c. Auditor's Responsibilities

The Auditor shall be responsible for the following:

i. Conducting an audit on the Fund with the objective of expressing an opinion on the financial statements to

Unitholders on whether the financial statements present fairly, an all material respects, the financial

position, results of operations and cash flow information in accordance with the generally accepted

accounting standards in the Kingdom;

ii. Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates

made by the Fund as well as evaluating the overall presentation of the financial statements;

iii. Considering internal controls relevant to the preparation of the financial statements of the Fund in order to

design procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Fund’s internal controls; and

iv. Reviewing the interim condensed financial statements of the Fund in accordance with the Saudi

Organization for Certified Public Accountants (“SOCPA”) standards for review of interim financial

information.

38. Other Information

a. Conflict of Interest

When a conflict of interests arises between the Fund Manager and the Fund or between various

funds, the Fund Manager shall make full disclosure of such conflict to the Fund Board as soon as

93

possible. An investor wishing to report an event of conflict of interests shall contact the

Compliance Officer of the Fund Manager. Procedures for handling conflicts of interest are

available upon request.

b. Information on Income Tax and Zakat

The Fund Manager shall use its reasonable efforts to structure the investments of the Fund in a

manner that reduces the payable tax or zakat. The Fund Manager shall not provide any advice on

the tax or Zakat liability arising from the acquisition, compensation or disposal of Units in the

Fund. Prospective Investors that are in doubt about their tax or Zakat status should seek

professional advice in order to make sure of tax or zakat due from the acquisition, holding or

disposal of Units in the Fund under the relevant regulations or those they may be subject to.

c. Information on Unitholders Meetings

i. Calling of a Unitholders Meeting

The Fund Manager may call for a meeting of Unitholders at its own discretion.

ii. Processes and Procedures for Calling of a Meeting of Unitholders

a. The Fund Manager shall call for a meeting of Unitholders within (10) days of receiving a

written request from the Custodian.

b. The Fund Manager shall call for a meeting of Unitholders within (10) days of receiving a

written request from Unitholders holding together at least 25% of the Fund Units value.

c. The Fund Manager shall call for a meeting of Unitholders by announcing it on its website and

that of Tadawul, and by sending a notice in writing to all Unitholders and the Custodian giving

(1) not less than (10) days’ notice of the meeting; (2) and no more than (21) days’ notice before

the meeting. The announcement and notice shall specify the date, place and time of the meeting

and the proposed agenda for the meeting. The Fund Manager shall, at the same time as sending

a notice to Unitholders regarding any meeting of Unitholders, also send a copy of any such

notice to CMA.

d. The quorum required to conduct a meeting of Unitholders shall be such number of Unitholders

holding together at least 25% of the Fund Units value or a greater percentage as specified in

94

Terms and Conditions and the Information Memorandum.

e. If the quorum requirements set out in this Clause are not met, the Fund Manager shall call for a

second meeting by announcing it on its website and that of Tadawul and shall send a notice in

writing to all Unitholders and the Custodian giving not less than (5) days' notice of the second

meeting (excluding the day on which the notice is sent and the day of the meeting). At the

second meeting, any number of Unitholder(s) holding any number of Units present in person or

represented by a proxy shall form a quorum.

f. Every Unitholder shall be entitled to appoint a proxy to represent such Unitholder at a meeting

of the Unitholders.

g. Every Unitholder shall be entitled to exercise one vote at the meeting of Unitholders for each

Unit which the Unitholder holds as till the time of the meeting. Unitholders meetings, its

deliberations and voting on decisions may be conducted through modern technology means in

accordance with requirements set by the CMA.

d. Termination of the Fund

The Fund Manager shall give Unitholders and CMA at least twenty-one (21) Business Days

written notice of the intention to terminate the Fund, without prejudice to the Fund’s Terms and

Conditions. Notwithstanding the preceding paragraph, the Fund Manager shall terminate the Fund

if the Net Asset Value of the Fund continues to be less than ten million Saudi Arabian Riyals

(SAR 10,000,000) for six (6) months from the date of notice issued by the Fund Manager to

CMA informing it of the fact that the Fund Net Asset Value is less than ten million Saudi Arabian

Riyals (SAR 10,000,000).

The Fund Manager shall commence liquidation of the Fund upon its termination, without

prejudice to these Terms and Conditions. The Fund Manager shall disclose on its website and that

of Tadawul, termination of the Fund and the timeline for liquidating it.

e. Complaints Procedure

If a Unitholder has any questions or complaints relating to operations of the Fund, such

Unitholder should contact Compliance and Anti-Money Laundering Department at +966 211

4842 or email [email protected].

mailto:[email protected]

95

Jadwa Investment Company adopts a documented complaints management policy that it uses

with its current customers. The Fund Manager shall use such policy Unitholders. Prospective

Investors and Unitholders wishing to obtain a copy of such policy should contact Compliance and

Anti-Money Laundering Department at +966 211 4842 or email [email protected] . A copy

of the complaint policies and procedures can be obtained through the company's website

(www.jadwa.com ).

f. Dispute Resolution

Any dispute related to any investment in the Fund shall be resolved by CMA’s Committee for

Resolution of Securities Disputes.

g. Documents Available to Unitholders in the Fund

The Fund Manager shall provide the following documents to Unitholders upon request:

i. Fund's Terms and Conditions;

ii. A document showing the Net Asset Value of the Fund;

iii. Annual periodic reports and financial statements in accordance with the Investment

Funds Regulations and

iv. Financial Statements of the Fund Manager.

h. Ownership of the Fund's assets

Unitholders shall commonly own the Fund's assets. Neither the Fund Manager nor the Custodian

shall have any interest or claim against such assets except to the extent that they own Units in the

Fund or as permitted by the Investment Funds Regulations or the Fund's Terms and Conditions.


General Legal Counsel and

Head of Compliance



mailto:[email protected]


96

Annex 1 – Investor Confirmation

I / we have read and understood the above Terms and Conditions and confirm my /our acceptance by

signing a copy thereof.

Client/Investor’s Name: ________________________________________________________

Signature: ____________________________

Date: __________________________________

For Company: __________________________________________________________

Authorized Signatory(ies): _____________________________________________________

Company’s Stamp:

Address: _____________________________________________________________________

Email: ________________________________

Mobile: _________________________________

Phone Number: ________________________

Fax Number: ___________________________

ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ

A Saudi Closed Joint Stock Company, licensed by the Capital Market Authority, with a Capital of SAR

852,735,000.

Head Office: Phone +966 11 279 1111 Fax +966 11 279 1571 P.O. Box 60677, Riyadh 11555, Kingdom

of Saudi Arabia.

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FUND INFORMATION

Name of Investment Fund

Jadwa Saudi Equity Fund (Public Open-Ended Fund)

Fund Benchmark Index

S&P Index for Saudi Shariah Compliant Equities (Total Return)

Initial Offering Date

May 16, 2007 G

OBJECTIVES OF THE INVESTMENT FUND

Investment Objectives

As an Open-Ended Investment Fund, the primary investment objective of the Fund is to provide long-term capital

appreciation for Unitholders by investing in shares of companies listed on Saudi Stock Exchange and Saudi

companies or any of their affiliates which are listed on any other stock exchange in accordance with Shariah

Investment Guidelines stipulated in Annex 1 of Terms and Conditions.

Fund Investment Policies and Practices

The Fund Manager’s investment decision making process combines top-down and bottom-up approaches. Using

top-down approach, portfolio management team analyses local fundamental economic indicators, current and

expected interest rates locally, dynamics of local sectors/industries along with other geo-political factors. The team

also analyses market related factors like historical and expected liquidity, volatility, etc. Bottom-up approach

involving fundamental research (that includes constructing financial models and detailed financial forecasts) is

used to select investment opportunities and construct the Fund’s portfolio. Portfolio management team of the Fund

Manager performs a regular assessment of investment opportunities to ensure portfolio allocations are in line with

long term return objectives of the Fund.

98

Key Risks of Investing in The Fund

a. Stock Market Risks

The major risk of the Fund is volatility of share prices which may lead to significant fluctuations in the

Fund’s Investment prices.

b. Past Performance of the Fund

Neither past performance of the Fund nor past performance of the Index is an indication of the Fund’s

performance in the future.

c. Fund Performance Guarantee

There is no guarantee to Unitholders that the Fund’s absolute performance or its performance relative to

the Index will repeat or match past performance.

d. Investment in the Fund is not a Bank Deposit

Investment in the Fund shall not be considered a deposit with a local bank that promotes or sells securities

or a deposit with any bank affiliated to the Fund.

e. Warning Statement about Potential Risks Associated with Investing in the Fund

There are several potential risks associated with investing in the Fund as shown in the list below.

f. List of Potential Risks of Investing in the Fund

- Political Change Risks

- Economic Conditions Risks

- Shariah Compliance Risks

- Foreign Currency Risks

- Liquidity Risks

- Initial Offering Risks

- Risks of Making Investment in other Funds

- Risks of Making Investment in Unrated Money Market Instruments

- Risks of Making Investment in other Markets

- Non-Existence of Suitable Investments

- Risks of Reliance on Key Personnel

- Credit Risks

- Reduction in Credit Rating Risks

- Risks of Making Investment in Rights Issues

- Conflict of Interest Risks

- Fund Management Risks

- Risks of Legal and Regulatory Changes

- Financing Risks

- Technical Risks

- Risks of Natural Disasters

For more information about possible risks of investing in the Fund, please refer to the Fund’s Information

Memorandum.

99

Fund Performance

Since Inception 5 years 3 years 1 year

15.03% - - -3.13% Class (A)

20.97% - - 1.35% Index

*As on December31, 2017


198.65% 64.17% 7.35% -3.80% Class (B)

51.66% 17.66% -3.98% 1.35% Index



15.42% - - -2.86% Class (C)

20.97% - - 1.35% Index


Index Class (C) Class (B) Class (A)

%0722 -

- 40.70%

- 2007*

%07720

- -40.49%

- 2008

%0707 -

- 29.78%

- 2009

%7702

- 19.53%

- 2010

100

%07.0 -

- -2.88%

- 2011

%2727

- 17.60%

- 2012

%02782

- 42.76%

- 2013

%2722

- 7.95%

- 2014

%02702

- 2.11%

- 2015

***%11.43

18.82%* 9.20% 18.74%* 2016*

1.35% -2.86% -3.80% -3.13% 2017

*Since inception on June 30, 2007

**Since establishment of Class (A) and Class (C) on September 27, 2016

***Performance of the Index throughout 2016

Remuneration of Services, Commissions and Fees

No more than 3% of Subscription Amount Subscription Fee


A Unit;


B Unit;


C Unit

Management Fee

1% of Redemption Amount. Early Redemption Fee

shall apply on Units that are redeemed within 30

days of Purchase Date

Early Redemption Fee

About SAR 30,000 for independent members only Fund Board

No more than SAR 40,000 per annum Auditor Fee

0.07% of the Fund’s Net Asset Value Custody Fees

0.08 % of the Fund’s Net Asset Value Administration Fee

101

No more than SAR 7,500 per annum Regulatory Fee

SAR 15,000 per annum for all classes Publication Fee

SAR 187.50 per transaction Dealing Fee

Fund Manager


A Saudi closed joint stock company (Commercial Register No. 0000772227 ) licensed by the CMA under licence

No. 06034-37 issued by the CMA

Head Office: Phone +966 11 279 1111 Fax +966 11 279 1571 P.O. Box 60677, Riyadh 11555, Kingdom

of Saudi Arabia.

Custodian

HSBC Saudi Arabia Ltd

The Custodian is licensed by the CMA under licence No. (05008-37) issued by the CMA

Head Office: Phone + 07000.070 022 Al Olaya Road - Al Murooj District, Riyadh 12283-2255, Kingdom of Saudi

Arabia

Fund Distributors

Derayah Financial

P.O. Box 722.72, Riyadh 00878, Kingdom of Saudi Arabia

Olaya Centre, 2nd

floor


Phone 070077788+

All Funds Bank S.A.

C/ Estfeta 6, La Moraleja

28109 Alcobendas

Madrid, Spain

Phone: +34912746400

Additional Information

For more information, please refer to the Fund Terms and Conditions, Information Memorandum and Annual

Report available at www.jadwa.com
